Ring Energy, Inc. (NYSE American: REI) (“Ring”) (“Company”)
announced today financial results for the three months and nine
months ended September 30, 2018. For the three month period ended
September 30, 2018, the Company reported oil and gas revenues of
$32,687,179, compared to revenues of $16,643,930 for the quarter
ended September 30, 2017. For the nine months ended September 30,
2018, the Company reported oil and gas revenues of $92,503,453,
compared to $43,391,032 for the nine months ended September 30,
2017.
For the three months ended September 30, 2018, Ring reported net
income of $5,693,628, or $0.09 per diluted share, compared to net
income of $3,073,760, or $0.06 per fully diluted share for the
three months ended September 30, 2017. For the nine months ended
September 30, 2018, the Company reported net income of $16,079,068,
or $0.27 per diluted share, compared to net income of $6,263,804,
or $0.12 per fully diluted share for the nine month period ended
September 30, 2017.
For the three months ended September 30, 2018, the net income
included a pre-tax “Realized Loss on Derivatives” of $2,722,774, an
“Unrealized Loss on Derivatives” of $566,649, and a non-cash charge
for stock-based compensation of $1,007,789. Excluding these items,
the net income per diluted share would have been $0.15. For the
nine months ended September 30, 2018, the net income included a
pre-tax “Realized Loss on Derivatives” of $6,600,226, an
“Unrealized Loss on Derivatives” of $2,456,623, and a non-cash
charge for stock-based compensation of $3,091,336. Excluding these
items, the net income per diluted share would have been $0.42.
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.
For the three months ended September 30, 2018, oil sales volume
increased to 555,020 barrels, compared to 346,900 barrels for the
same period in 2017, a 59.9% increase, and gas sales volume
increased to 280,200 MCF (thousand cubic feet), compared to 201,158
MCF for the same period in 2017, a 39.2% increase. On a barrel of
oil equivalent (“BOE”) basis for the three months ended September
30, 2018, production sales increased to 601,720 BOEs, compared to
380,426 BOEs for the same period in 2017, a 58.1% increase, and
522,622 BOEs for the second quarter of 2018, a 15% increase. For
the nine months ended September 30, 2018, oil sales volume
increased to 1,504,330 barrels, compared to 893,562 barrels for the
same period in 2017, a 68.3% increase, and gas sales volume
increased to 809,287 MCF, compared to 559,551 MCF for the same
period in 2017, a 44.6% increase. On a BOE basis for the nine
months ended September 30, 2018, production sales increased to
1,639,211 BOEs, compared to 986,820 BOEs for the same period in
2017, a 66.1% increase.
The average commodity prices received by the Company were $57.00
per barrel of oil and $3.76 per MCF of natural gas for the quarter
ended September 30, 2018, compared to $46.17 per barrel of oil and
$3.13 per MCF of natural gas for the quarter ended September 30,
2017. On a BOE basis for the three month period ended September 30,
2018, the average price received was $54.32. The average prices
received for the nine months ended September 30, 2018 were $59.65
per barrel of oil and $3.42 per MCF of natural gas, compared to
$46.56 per barrel of oil and $3.19 per MCF of natural gas for the
nine month period ended September 30, 2017. On a BOE basis for the
nine month period ended September 30, 2018, the average price
received was $56.43.
Lease operating expenses, including production taxes, for the
three months ended September 30, 2018 were $14.57 per BOE, a 9.7%
increase from the prior year. Depreciation, depletion and
amortization costs, including accretion, increased 42% to $18.44
per BOE. General and administrative costs, which included a
$1,007,789 charge for stock-based compensation, were $5.33 per BOE,
a 14% decrease. For the nine months ended September 30, 2018, lease
operating expenses, including production taxes, were $14.67 per
BOE, a 15.4% increase. Depreciation, depletion and amortization
costs, including accretion, were $17.73 per BOE, a 26.2% increase,
and general and administrative costs, which included a $3,091,336
charge for stock-based compensation, were $5.76 per BOE, a 25%
decrease.
Cash provided by operating activities, before changes in working
capital, for the three and nine months ended September 30, 2018 was
$18,963,008, or $0.31 per fully diluted share, and $55,520,527, or
$0.92 per fully diluted share, compared to $10,270,367 and
$26,283,307, or $0.19 and $0.51 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 nine
months ended September 30, 2018 was $18,998,041, or $0.31 per fully
diluted share, and $55,508,099, or $0.92 per fully diluted share,
compared to $10,184,814 and $26,033,764, or $0.19 and $0.50 in
2017. (See accompanying table for a reconciliation of net income to
adjusted EBITDA).
As of September 30, 2018, $17,000,000 was outstanding on the
Company’s $500 million senior secured credit facility.
Mr. Kelly Hoffman, the Company’s Chief Executive Officer,
commented, “The third quarter production results confirmed we are
back on track to show steady, low double-digit production growth
quarter over quarter. Our third quarter production showed an
increase of close to 13% over the second quarter, and our average
daily production exceeded 7,200 BOEs in September, an increase of
over 10% from our average production in June. We are very
encouraged by the results we continue to see on all our properties.
Based on the amended 2018 CAPEX budget we announced in September,
we are on budget. We continue to drill and complete our one-mile
laterals in the CBP for our stated cost of $2.2 million, which
includes the associated tank battery, and closely monitor all other
costs associated with equipment purchases and infrastructure
improvements. On October 2, 2018, a research report was written
citing several issues that we believe were in error. In response,
the Company issued a press release announcing a conference call to
be held on October 3, 2018, inviting all shareholders the
opportunity to hear the Company address those issues. In our
opinion, we addressed each issue we disputed with documented
history, and in some cases third party verification. For those
investors unable to participate on the call, the Company has posted
the transcript of the call on the Company website,
www.ringenergy.com. We recognize that we have not been as
transparent and visible as we should. To that end, management has
scheduled several trips to meet with both current and potential
investors, as well as participating at two energy conferences
between now and year end. This will be an ongoing process with the
goal of better communication with our shareholders and analysts
that have issued research coverage on the Company.”
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 September 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 Nine Months Ended
September 30, September 30,
2018 2017
2018 2017
Oil and Gas Revenues $ 32,687,179
$ 16,643,930 $ 92,503,453
$ 43,391,032
Costs and Operating Expenses .
Oil and gas production costs 7,217,940 4,261,923 19,638,163
10,481,669 Oil and gas production taxes 1,551,097 787,777 4,405,974
2,062,215 Depreciation, depletion and amortization 10,930,563
4,823,044 28,576,057 13,433,489 Asset retirement obligation
accretion 167,433 109,974 493,223 420,723 General and
administrative expense 3,205,116
2,369,131 9,442,327
7,576,391
Total Costs and Operating
Expenses 23,072,149
12,351,849 62,555,744
33,974,487
Income from Operations
9,615,030 4,292,081
29,947,709
9,416,545
Other Income (Expense) Interest
income 5,911 85,553 97,855 249,543 Interest expense (40,944 ) -
(85,427 ) - Realized loss on derivatives (2,722,774 ) - (6,600,226
) - Unrealized gain (loss) on change in fair value of derivatives
(566,649 ) 65,828
(2,456,623 ) 65,828
Net Other Income (Expense) (3,324,456 )
151,381 (9,044,421 )
315,371
Income before Tax
Provision 6,290,574 4,443,462 20,903,288 9,731,916
Provision for Income Taxes (596,946 )
(1,369,702 ) (4,824,220 )
(3,468,112 )
Net Income $ 5,693,628
$ 3,073,760 $ 16,079,068
$ 6,263,804
Basic Earnings Per
Common Share $ 0.09 $ 0.06 $ 0.27 $ 0.12
Diluted Earnings
Per Common Share $ 0.09 $ 0.06 $ 0.27 $ 0.12
Basic Weighted-Average Common Shares Outstanding 60,405,355
53,009,696 59,084,300 50,441,375
Diluted Weighted-Average Common
Shares Outstanding 61,830,381 54,367,648 60,567,232 51,760,109
COMPARATIVE OPERATING
STATISTICS Three Months Ended September 30, 2018 2017
Change Net Sales - BOE per day 6,540 4,135 58 % Per BOE:
Average Sales Price $ 54.32 $ 43.75 24 % Lease Operating
Expenses 11.99 11.20 7 % Production Taxes 2.58 2.07 25 % DD&A
18.17 12.68 43 % Accretion 0.28 0.29 0 % General &
Administrative Expenses 5.33 6.23 -14 % Nine Months Ended
September 30, 2018 2017 Change Net Sales - BOE per day 6,004
3,615 66 % Per BOE: Average Sales price $ 56.43 $ 43.97 28 %
Lease Operating Expenses 11.98 10.62 13 % Production Taxes 2.69
2.09 29 % DD&A 17.43 13.61 28 % Accretion 0.30 0.43 -30 %
General & Administrative Expenses 5.76 7.68 -25 %
RING ENERGY, INC. BALANCE
SHEET September 30,
December 31,
2018 2017 ASSETS Current
Assets Cash $ 3,770,844 $ 15,006,581 Accounts receivable
11,575,024 12,833,883 Joint interest billing receivable 1,877,833
1,054,022 Prepaid expenses 379,158 229,438
Total Current Assets 17,602,859
29,123,924
Property and Equipment Oil and natural gas
properties subject to amortization 597,810,538 433,591,134 Fixed
assets subject to depreciation 1,465,551
1,884,818
Total Property and Equipment 599,276,089
435,475,952 Accumulated depreciation, depletion and amortization
(90,127,258 ) (61,864,932 )
Net Property and
Equipment 509,148,831 373,611,020
Deferred Income Taxes 6,407,980 11,232,200
Deferred
Financing Costs 494,738 135,342
Total Assets $ 533,654,408 $ 414,102,486
LIABILITIES AND STOCKHOLDERS' EQUITY Current
Liabilities Accounts payable $ 42,485,518 $ 44,475,163
Derivative liabilities 6,424,909 3,968,286
Total Current Liabilities 48,910,427
48,443,449 Revolving line of credit 17,000,000
- Asset retirement obligations 10,155,215
9,055,697
Total Liabilities 76,065,642
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; 60,491,142 shares and 54,224,029
shares issued and outstanding, respectively
60,491 54,224 Additional paid-in capital 482,804,860 397,904,769
Accumulated deficit (25,276,585 ) (41,355,653 )
Total Stockholders' Equity 457,588,766
356,603,340
Total Liabilities and Stockholders'
Equity $ 533,654,408 $ 414,102,486
RING ENERGY, INC. STATEMENTS
OF CASH FLOW Nine Months Ended September 30, September
30,
2018 2017 Cash Flows From
Operating Activities Net income (loss) $ 16,079,068 $ 6,263,804
Adjustments to reconcile net income (loss) to net cash Provided by
operating activities: Depreciation, depletion and amortization
28,576,057 13,433,489 Accretion of asset retirement obligation
493,223 420,723 Share-based compensation 3,091,336 2,763,007
Deferred income tax provision 4,389,690 3,383,131 Excess tax
deficiency related to share-based compensation 434,530 84,981
Change in fair value of derivative instruments 2,456,623 (65,828 )
Changes in assets and liabilities: Accounts receivable 435,048
(4,604,534 ) Prepaid expenses (509,116 ) 102,735 Accounts payable
(2,989,645 ) 7,126,520 Settlement of asset retirement obligation
(452,468 ) (605,432 )
Net Cash Provided by
Operating Activities 52,004,346 28,302,596
Cash Flows from Investing Activities Payments to
purchase oil and natural gas properties (4,090,642 ) (26,915,783 )
Payments to develop oil and natural gas properties (158,069,999 )
(87,576,052 ) 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 - (309,217 )
Net Cash Used in
Investing Activities (162,055,105 ) (117,617,217
)
Cash Flows From Financing Activities Proceeds from
issuance of common stock, net of offering costs 81,815,022
59,104,393 Proceeds from revolving line of credit 17,000,000
-
Net Cash Provided by (Used in) Financing
Activities 98,815,022 59,104,393
Net Decrease in Cash (11,235,737 ) (30,210,228 )
Cash at
Beginning of Period 15,006,581 71,086,381
Cash at End of Period $ 3,770,844 $ 40,876,153
Supplemental Cash flow Information Cash paid for
interest $ 54,652 -
Noncash
Investing and Financing Activities Asset retirement obligation
incurred during development 1,058,763 846,868 Use of inventory in
property development - 3,364,786
Capitalized expenditures attributable to
drilling projects financed through current liabilities
24,000,000 5,000,000
RECONCILIATION OF CASH FLOW FROM
OPERATIONS Net cash provided by operating activities $
52,004,346 $ 28,302,596 Change in operating assets and liabilities
3,516,181 (2,019,289 ) Cash flow from
operations $ 55,520,527 $ 26,283,307
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 Nine
Months Ended September 30, September 30,
2018
2017 NET INCOME $ 16,079,068 $ 6,263,804
Net other (income) expense 9,044,421 (315,371 ) Realized
loss on derivatives (6,600,226 ) 0 Income tax expense 4,824,220
3,468,112 Depreciation, depletion and amortization 28,576,057
13,433,489 Accretion of discounted liabilities 493,223 420,723
Stock-based compensation
3,091,336 2,763,007
ADJUSTED EBITDA $ 55,508,099
$ 26,033,764
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version on businesswire.com: https://www.businesswire.com/news/home/20181106005978/en/
K M Financial, Inc.Bill Parsons, (702) 489-4447
Ring Energy (AMEX:REI)
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