REI Ring Energy Inc

Ring Energy, Inc. (NYSE American: REI) (“Ring”) (“Company”) announced today financial results for the three months and six months ended June 30, 2018. For the three month period ended June 30, 2018, Ring reported oil and gas revenues of $29,924,883, compared to revenues of $14,503,309 for the quarter ended June 30, 2017. For the six months ended June 30, 2018, the Company reported oil and gas revenues of $59,816,274, compared to $26,747,102 for the six months ended June 30, 2017.

For the three months ended June 30, 2018, Ring reported net income of $4,719,806, or $0.08 per diluted share. For the six months ended June 30, 2018, the Company reported net income of $10,385,440, or $0.17 per diluted share. This compares to net income of $1,910,763, or $0.04 per fully diluted share for the three months ended June 30, 2017, and net income of $3,190,044, or $0.06 per fully diluted share for the six month period ended June 30, 2017.

For the three months ended June 30, 2018, the net income included a pre-tax “Unrealized Loss on Derivatives” of $1,099,273. Excluding this item, the net income per diluted share would have been $0.09. For the six months ended June 30, 2018, the net income included a pre-tax “Unrealized Loss on Derivatives” of $1,889,974. Excluding this item, the net income per diluted share would have been $0.20.

For the three months ended June 30, 2018, oil sales volume increased to 469,446 barrels, compared to 306,402 barrels for the same period in 2017, a 53.2% increase, and gas sales volume increased to 319,056 MCF (thousand cubic feet), compared to 190,044 MCF for the same period in 2017, a 67.8% increase. On a barrel of oil equivalent (“BOE”) basis for the three months ended June 30, 2018, production sales increased to 522,622 BOEs, compared to 338,076 BOEs for the same period in 2017, a 54.5% increase, and 514,869 BOEs for the first quarter of 2018, a 1.5% increase. For the six months ended June 30, 2018, oil sales volume increased to 949,310 barrels, compared to 546,662 barrels for the same period in 2017, a 73.6% increase, and gas sales volume increased to 529,087 MCF, compared to 358,393 MCF for the same period in 2017, a 47.6% increase. On a BOE basis for the six months ended June 30, 2018, production sales increased to 1,037,491 BOEs, compared to 606,394 BOEs for the same period in 2017, a 71.1% increase.

The average commodity prices received by the Company were $61.70 per barrel of oil and $3.02 per MCF of natural gas for the quarter ended June 30, 2018, compared to $45.34 per barrel of oil and $3.22 per MCF of natural gas for the quarter ended June 30, 2017. The average prices received for the six months ended June 30, 2018 were $61.21 per barrel of oil and $3.24 per MCF of natural gas, compared to $46.81 per barrel of oil and $3.23 per MCF of natural gas for the six month period ended June 30, 2017.

Lease operating expenses, including production taxes, for the three months ended June 30, 2018 were $15.43 per BOE, a 24% increase from the prior year. Depreciation, depletion and amortization costs, including accretion, increased 13.5% to $17.82 per BOE. General and administrative costs, which included a $1,002,348 charge for stock based compensation, were $6.03 per BOE, a 14% decrease. For the six months ended June 30, 2018, lease operating expenses, including production taxes, were $14.72 per BOE, a 19% increase. Depreciation, depletion and amortization costs, including accretion, were $17.32 per BOE, a 17.7% increase, and general and administrative costs, which included a $2,083,547 charge for stock based compensation, were $6.01 per BOE, a 30% decrease.

Cash provided by operating activities, before changes in working capital, for the three and six months ended June 30, 2018 was $17,389,257, or $0.28 per fully diluted share, and $36,557,519, or $0.61 per fully diluted share, compared to $8,791,004 and $16,012,940, or $0.17 and $0.32 per fully diluted share for the same periods in 2017. Earnings before interest, taxes, depletion and other non-cash items (“Adjusted EBITDA”) for the three and six months ended June 30, 2018 was $17,306,266, or $0.28 per fully diluted share, and $36,510,058, or $0.61 per fully diluted share, compared to $8,743,693 and $15,848,950, or $0.17 and $0.31 in 2017. (See accompanying table for a reconciliation of net income to adjusted EBITDA).

On June 20, 2018, the Company announced it had increased the borrowing base on its $500 million senior secured credit facility from $60 million to $175 million. There was no outstanding debt on the Company’s $500 million senior secured credit facility at June 30, 2018.

Mr. Kelly Hoffman, the Company’s Chief Executive Officer, commented, “We resolved a couple of minor drilling and production delays early in the quarter and have seen our production continue to grow, exceeding 6,600 BOEs per day by the end of June. With the continued success of our horizontal drilling and development program and the positive results from both the North Gaines and Brushy Canyon wells, that growth will not only continue but accelerate, moving us closer to our goal of cash flow positive by the end of the year. We continue to see many acquisition opportunities in both the Central Basin Platform and Delaware Basin. We have increased our borrowing base to $175 million on our senior secured credit facility and will continue to look for opportunities that will be immediately accretive to the Company and its shareholders.”

Non-GAAP Financial Measures:

Net income for the three months ended June 30, 2018 includes a non-cash charge for stock based compensation of $1,002,348. Net income for the six months ended June 30, 2018 includes a non-cash charge for stock based compensation of $2,083,547. Excluding such items, the Company’s net loss would have been $0.09 per diluted share for the three months ended June 30, 2018, and net earnings of $0.20 for the six months ended June 30, 2018. 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, its Form 10-Q for the quarter ended June 30, 2018 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.

              RING ENERGY, INC. STATEMENTS OF OPERATIONS   Three Months Ended Six Months Ended

June 30,

June 30,

2018

2017

2018

2017

  Oil and Gas Revenues $ 29,924,883       $ 14,503,309   $ 59,816,274       $ 26,747,102     Costs and Operating Expenses . Oil and gas production costs 6,638,313 3,514,375 12,420,223 6,219,746 Oil and gas production taxes 1,428,995 691,174 2,854,877 1,274,438 Depreciation, depletion and amortization 9,144,115 5,136,426 17,645,494 8,610,445 Asset retirement obligation accretion 164,670 173,573 325,790 310,749 General and administrative expense   3,151,231         2,366,149     6,237,211         5,207,260     Total Costs and Operating Expenses   20,527,324         11,881,697     39,483,595         21,622,638     Income from Operations   9,397,559         2,621,612         20,332,679         5,124,464     Other Income (Expense) Interest Income 82,991 47,311 91,944 163,990 Interest Expense - - (44,483 ) - Realized loss on derivatives (2,402,426 ) - (3,877,452 ) - Unrealized loss on change in fair value of derivatives   (1,099,273 )       -         (1,889,974 )       -     Net Other Income (Expense)   (3,418,708 )       47,311         (5,719,965 )       163,990     Income before Tax Provision 5,978,851 2,668,923 14,612,714 5,288,454   Provision for Income Taxes   (1,259,045 )       (758,160 )   (4,227,274 )       (2,098,410 )   Net Income $ 4,719,806       $ 1,910,763   $ 10,385,440       $ 3,190,044     Basic Earnings Per Common Share $ 0.08 $ 0.04 $ 0.18 $ 0.06 Diluted Earnings Per Common Share $ 0.08 $ 0.04 $ 0.17 $ 0.06     Basic Weighted-Average Common Shares Outstanding 60,388,029 49,156,895 58,412,825 49,135,929 Diluted Weighted-Average Common Shares Outstanding 61,964,010 50,474,397 59,967,309 50,434,490             COMPARATIVE OPERATING STATISTICS     Three Months Ended June 30, 2018 2017 Change   Net Sales - BOE per day 5,743 3,715 55 % Per BOE: Average Sales Price $ 57.26 $ 42.90 33 %   Lease Operating Expenses 12.70 10.40 22 % Production Taxes 2.73 2.04 34 % DD&A 17.50 15.19 15 % Accretion 0.32 0.51 -37 % General & Administrative Expenses 6.03 7.00 -14 %   Six Months Ended June 30, 2018 2017 Change   Net Sales - BOE per day 5,732 3,350 71 % Per BOE: Average Sales price $ 57.65 $ 44.11 31 %   Lease Operating Expenses 11.97 10.26 17 % Production Taxes 2.75 2.10 31 % DD&A 17.01 14.20 20 % Accretion 0.31 0.51 -39 % General & Administrative Expenses 6.01 8.59 -30 %                 RING ENERGY, INC. BALANCE SHEET   June 30,

 

December 31,

2018

2017

  ASSETS Current Assets Cash $ 13,431,146 $ 15,006,581 Accounts receivable 11,344,504 12,833,883 Joint interest billing receivable 1,331,682 1,054,022 Prepaid expenses   437,733     229,438   Total Current Assets   26,545,065     29,123,924   Property and Equipment Oil and natural gas properties subject to amortization 547,069,209 433,591,134

Fixed assets subject to depreciation

  1,465,551     1,884,818   Total Property and Equipment 548,534,760 435,475,952 Accumulated depreciation, depletion and amortization   (79,196,695 )   (61,864,932 ) Net Property and Equipment   469,338,065     373,611,020   Deferred Income Taxes 7,004,926 11,232,200 Deferred Financing Costs   565,415     135,342   Total Assets $ 503,453,471   $ 414,102,486     LIABILITIES AND STOCKHOLDERS' EQUITY Current Liabilities Accounts payable $ 36,887,834 $ 44,475,163 Derivative liabilities   5,858,260     3,968,286   Total Current Liabilities   42,746,094     48,443,449     Asset retirement obligations   9,815,977     9,055,697   Total Liabilities   52,562,071     57,499,146     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; 60,388,029 shares and 54,224,029 shares issued and outstanding, respectively

60,388 54,224 Additional paid-in capital 481,801,225 397,904,769 Accumulated deficit   (30,970,213 )   (41,355,653 ) Total Stockholders' Equity   450,891,400     356,603,340   Total Liabilities and Stockholders' Equity $ 503,453,471   $ 414,102,486                     RING ENERGY, INC. STATEMENTS OF CASH FLOW   Six Months Ended June 30, June 30,

2018

2017

  Cash Flows From Operating Activities Net income $ 10,385,440 $ 3,190,044 Adjustments to reconcile net income to net cash Provided by operating activities: Depreciation, depletion and amortization 17,645,494 8,610,445 Asset retirement obligation accretion 325,790 310,749 Share-based compensation 2,083,547 1,803,292 Deferred income tax provision 3,068,670 1,787,513 Excess tax deficiency related to share-based compensation 1,158,604 310,897 Change in fair value of derivative instruments 1,889,974 - Changes in assets and liabilities: Accounts receivable 1,211,719 (4,948,634 ) Prepaid expenses and retainers (638,368 ) (57,620 ) Accounts payable (3,587,329 ) 7,424,473 Settlement of asset retirement obligation   (265,728 )   (309,511 ) Net Cash Provided by Operating Activities   33,277,813     18,121,648   Cash Flows from Investing Activities Payments to purchase oil and natural gas properties (3,270,000 ) (24,727,390 ) Payments to develop oil and natural gas properties (113,507,857 ) (49,184,297 ) Proceeds from disposal of fixed assets subject to depreciation 105,536 - Purchase of inventory for development - (2,816,165 ) Purchase of equipment, vehicles and leasehold improvements   -     (186,599 ) Net Cash Used in Investing Activities   (116,672,321 )   (76,914,451 ) Cash Flows From Financing Activities Amounts paid for registration statement for future offerings - (157,200 ) Proceeds from issuance of common stock, net of offering costs 81,819,073 - Net Cash Provided by Financing Activities   81,819,073     (157,200 ) Net Decrease in Cash (1,575,435 ) (58,950,003 ) Cash at Beginning of Period   15,006,581     71,086,381   Cash at End of Period $ 13,431,146   $ 12,136,378     Supplemental Cash flow Information Cash paid for interest $ 44,483     -     Noncash Investing and Financing Activities Asset retirement obligation incurred during development 700,218 476,437 Use of inventory in property development - $ 2,521,265

Capitalized expenditures attributable to drilling projects financed through current liabilities

19,000,000 8,000,000   RECONCILIATION OF CASH FLOW FROM OPERATIONS   Net cash provided by operating activities $ 33,277,813 $ 18,121,648 Change in operating assets and liabilities   3,279,706     (2,108,708 )   Cash flow from operations $ 36,557,519   $ 16,012,940     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   Six Months Ended June 30, June 30,

2018

2017

  NET INCOME $ 10,385,440 $ 3,190,044   Net other income expense 5,719,965 (163,990 ) Realized loss on derivatives (3,877,452 ) - Income tax expense (benefit) 4,227,274 2,098,410 Depreciation, depletion and amortization 17,645,494 8,610,445 Accretion of discounted liabilities 325,790 310,749 Stock based compensation 2,083,547 1,803,292   ADJUSTED EBITDA $ 36,510,058   $ 15,848,950    

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K M Financial, Inc.Bill Parsons, 702-489-4447