Ring Energy, Inc. (NYSE American: REI) (“Ring”) (“Company”)
today released its operations updates for the third quarter and
first nine months of 2018. In the three months ended September 30,
2018, the Company, on its Central Basin Platform (“CBP”) asset,
drilled 16 new horizontal San Andres wells and were in the process
of drilling two more. The Company also drilled two new horizontal
wells on its North Gaines Property. All wells drilled in the third
quarter were one mile long. In the third quarter, the Company
finished testing and filed Initial Potentials (“IPs”) on 15 new
horizontal San Andres wells – four wells which were drilled in the
first quarter of 2018, five which were drilled in the second
quarter of 2018 and six which were drilled in the third quarter of
2018. The average IP on the 15 wells tested in the third quarter
2018 was approximately 435 Barrel of Oil Equivalents (“BOE”) per
day, or 103 BOE per 1,000 feet. This compares to 18 new horizontal
wells which the Company finished testing in the second quarter of
2018, and had average IPs of 440 BOE per day, or 103 BOE per 1,000
feet. In addition, the Company had 17 new horizontal San Andres
wells which were in varying stages of completion and testing on
September 30, 2018.
For the nine months ended September 30, 2018, the Company has
drilled 40 new horizontal San Andres wells on its CBP asset. In
addition, the Company has drilled three new horizontal well on its
North Gaines Property, one new horizontal Brushy Canyon well on its
Delaware Basin Property, three saltwater disposal wells and
continued up-grading the infrastructure in all areas. In the first
nine months of 2018, the Company tested and filed IPs on 45 new
horizontal wells. The average IP on the 45 wells was 437 BOE per
day, or 103 BOE per 1,000 feet.
In the second and third quarters of 2018, the Company performed
workovers on 11 existing San Andres horizontal wells because of an
iron sulfide buildup in the wellbores. The average cost of each
workover was approximately $350,000. Based on a received price per
BOE of $50, the payback period ranges from four to six months. Mr.
Danny Wilson, Ring’s Executive Vice President and Chief Operating
Officer, stated, “We noticed an abnormal decline in some of the
older wells, discovered the buildup of iron sulfide, initiated a
program of cleaning out and acidizing, and have seen those wells
return, and in some cases exceed, our current production curve.
This is not a recurring issue and not one that effects all of the
wells.”
North Gaines Property –
The Company drilled and completed two new horizontal wells, the
Ellen B Peters 4H (“Ellen”) and Loki 2H (“Loki”), on its North
Gaines Property in the third quarter. The Company completed testing
on the Ellen early in the third quarter and filed an IP of 431 BOE
per day. After initial production, the Ellen has stabilized and has
been producing approximately 150 barrels of oil per day (“BOPD”)
and 60,000 cubic feet of natural gas per day for the past month.
The Loki is still being tested but preliminary production results
are showing approximately 100 BOPD and 50,000 cubic feet of natural
gas per day. The well still has a high fluid level and management
is hopeful that as that level drops the oil production will
improve. Mr. Wilson commented, “We continue to be encouraged with
the results we are seeing in North Gaines. We continue to learn as
we gather more information from each well we drill. We will be
drilling two more new horizontal wells in the fourth quarter.”
Delaware Basin Property –
Management stated in the Company’s second quarter 2018
operations update that it had drilled and completed its first
horizontal well, the Phoenix State #1H (“Phoenix”), on its Delaware
Basin Property in the Brushy Canyon formation. At that time
preliminary production results were approximately 130 barrels of
oil per day and over 2,800,000 cubic feet of natural gas per day.
The well is still undergoing testing as the fluid levels and
pressure levels are still high and management believes it is
possible to see higher oil rates as the fluid level drops.
Currently, the Phoenix is producing approximately 80 BOPD and
1,800,000 cubic feet of natural gas per day. Mr. Danny Wilson,
commented, “The Phoenix was drilled on the high end of structure
and as such is gassier than we anticipated. We will be drilling two
more horizontal wells in the Brushy Canyon formation in the fourth
quarter. Both wells are planned to be drilled lower in the
structure, where the structure has shown to be thicker, and
existing producing vertical wells have shown higher oil cuts and
less gas. In preparation for further development we have completed
our gas transmission system and have begun selling our gas
production.”
As a result, net production for the third quarter of 2018 was
approximately 600,000 BOEs, as compared to net production of
376,000 BOEs for the third quarter of 2017, an approximate 59.5%
increase, and net production of 532,000 for the second quarter of
2018, an approximate 12.8% increase. September 2018 average net
daily production was approximately 7,294 BOEs, as compared to net
daily production of 4,345 BOEs in September 2017, an approximate
67.8% increase, and net daily production of 6,605 in June 2018, an
approximate 10.4% increase. The average estimated price received
per BOE in the third quarter 2018 was $52.00. For the nine months
ended September 30, 2018, net production was approximately
1,639,000 BOEs, as compared to 980,000 for the nine months ended
September 30, 2017, an approximate 67.2% increase.
Mr. Kelly Hoffman, Ring’s Chief Executive Officer, stated, “The
Company is back on track as shown by our third quarter results. We
continue to update and improve our infrastructure in preparation
for our on-going drilling and development in the CBP, North Gaines
and Delaware Basin. We continue to vary our selection of drill
sites to include both core and non-core sites for the sole purpose
of proving out and delineating for future development and possible
acquisition opportunities. We have no plans currently, or in the
near future to return to the capital markets as we believe we have
ample funds by way of our current cash flow and senior credit
facility to accomplish our goals for 2018. Our gas system in the
Delaware Basin is now completed and we are currently selling gas
from our Phoenix well. Had we been able to sell rather than flare
that gas in the third quarter it could have added an additional
150-200 BOEPD to our production.”
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.
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K M Financial, Inc.Bill Parsons, 702-489-4447
Ring Energy (AMEX:REI)
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