Ring Energy, Inc. (NYSE American: REI) (“Ring” or the “Company”)
today reported operational and financial results for the fourth
quarter and full year 2020 including Ring’s year-end 2020 reserves
and affirmed 2021 guidance.
Highlights and Recent Key
Items
-
Exceeded high end of guidance and sold 9,307 barrels of oil
equivalent per day (“Boe/d”), or 856,271 barrels of oil equivalent
(“Boe”) (86% oil), in the fourth quarter of 2020, despite no new
wells coming online during the quarter;
-
Reported a net loss for full year 2020 of $253.4 million, or $3.48
per diluted share, and a net loss of $160.3 million, or $1.83 per
diluted share, in the fourth quarter of 2020;
-
Reported Adjusted Net Income1 of $20.7 million, or $0.28 per
diluted share, for full year 2020 and Adjusted Net Income of $6.5
million, or $0.07 per diluted share, in the fourth quarter of
2020;
-
Generated Adjusted EBITDA1 of $86.1 million for full year 2020 and
$24.5 million in the fourth quarter of 2020;
-
Produced significant Free Cash Flow1 of $39.7 million for full year
2020, including $12.7 million in the fourth quarter;
-
Remained cash flow positive for the fifth consecutive quarter even
with the recent resumption of development drilling in Q4 2020;
-
Utilized Free Cash Flow and cash on hand to pay down $75 million of
debt from the maximum amount drawn during full year 2020, including
$47 million in the fourth quarter;
-
Performed eight conversions from electrical submersible pumps to
rod pumps (“CTR”) in Q4 2020, and 29 CTR conversions in 2020,
reducing future overall operating costs and diminishing costly
workovers;
-
Decreased lifting cost2 by 8% to $10.52 per Boe for full year 2020
compared to $11.42 per Boe for full year 2019;
-
Reported year-end 2020 proved reserves3 of 76.5 million barrels of
oil equivalent (“MMBoe”), compared with 81.1 MMBoe at year-end
2019;
-
Additions, improved well performance and technical revisions led to
net upward revisions of 1.3 MMBoe in 2020;
-
Reduced SEC pricing led to downward revisions of 2.7 MMBoe and
production for 2020 was 3.2 MMBoe;
-
Completed public and registered direct offerings aggregating $20.8
million of gross proceeds with net proceeds of $19.4 million that
provided the necessary liquidity to resume drilling
operations;
-
In early December 2020, initiated a targeted Northwest Shelf
drilling program of eight to ten wells that focuses on the
Company’s most attractive drilling inventory in Yoakum County,
Texas, in response to a rising oil price environment;
-
Appointed Paul D. McKinney as Chairman and Chief Executive Officer
and welcomed new executive team and three new Board members during
the fourth quarter of 2020; and
-
Affirmed full year 2021 sales volumes, operating expense and
capital spending guidance.
Mr. Paul D. McKinney, Chairman of the Board and
Chief Executive Officer, commented, “We ended 2020 with strong
fourth quarter operational and financial results, including sales
volumes of 9,307 Boe/d that exceeded our guidance. The continued
execution of our targeted CTR program and other high rate of return
workover projects significantly contributed to our performance
during the period. These projects reduce our operating costs and
help stabilize our production levels. As a result of these actions
and other strategic initiatives to enhance our operational
performance and control costs, we generated $12.7 million of free
cash flow, marking the fifth consecutive quarter of free cash flow.
We used this free cash flow to help pay down $47 million on our
revolving credit facility.
“Looking back at full year 2020, I am pleased
with our overall results given the unprecedented challenges Ring
and our industry faced due to the pandemic and its impact on the
global oil demand and supply environment. I want to thank all our
employees for their hard work and tireless efforts. Our focus and
dedication to executing our updated strategic vision has developed
renewed enthusiasm within the Company. We are building a culture
focused on operational excellence, sustainability and profitability
with a clear mandate that every employee has a responsibility to
ensure we operate safely and with the highest regards toward the
environment. We are excited about the progress we’ve made and
believe Ring is well positioned for success in 2021 and
beyond.”
“As I have said in the past, we remain committed
to operational excellence to steady production levels and control
costs while pursuing rigorous capital discipline by investing in
our highest risk-adjusted return opportunities. A clear example is
our recently initiated Northwest Shelf drilling program. The first
well we drilled, the Badger 709 B 6XH, was brought online January
29th and has averaged so far this month 363 BOPD, continuing to
increase and currently producing over 400 BOPD. The other three
wells are in early stages of cleaning up as well and are coming in
equal to or ahead of our expectations. When compared to
unconventional shale producers, we benefit from long life,
low-decline reserves, which further support our ability to generate
free cash flow even during lower oil price environments. We will
continue to leverage our unique position in the marketplace to
further pay down debt and potentially capitalize on accretive
acquisitions that add value for our shareholders.”
For the fourth quarter of 2020, the Company
reported a net loss of $160.3 million, or $1.83 per diluted share,
which included before tax adjustments of $129.6 million for a
non-cash ceiling test impairment primarily due to lower oil
pricing, a $15.2 million non-cash unrealized commodity derivative
loss, and $2.8 million for share-based compensation. Excluding the
estimated after-tax impact of these adjustments and adding back the
full valuation against its deferred tax assets of $50.6 million,
the Company’s Adjusted Net Income was $6.5 million, or $0.07 per
diluted share. In the third quarter of 2020, the Company reported a
net loss of $2.0 million, or $0.03 per diluted share, and Adjusted
Net Income of $3.4 million, or $0.05 per diluted share. In the
fourth quarter of 2019, Ring reported net income of $5.0 million,
or $0.07 per diluted share, and Adjusted Net Income of $10.3
million, or $0.15 per diluted share.
Adjusted EBITDA totaled $24.5 million for the
fourth quarter 2020 compared to $19.9 million in the third quarter
of 2020 and $34.4 million in the fourth quarter of 2019. The
year-over-year reduction was driven by lower realized pricing and
sales volumes.
Free Cash Flow for the fourth quarter of 2020
totaled $12.7 million compared with $11.3 million in the third
quarter of 2020 and $16.2 million for the fourth quarter of
2019.
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 2020
were 9,307 Boe/d (86% oil), or 856,271 Boe, a slight decrease of 3%
compared to 9,549 Boe/d (89% oil) in the third quarter of 2020 and
11,448 Boe/d (88% oil) in the fourth quarter of 2019. Sales volumes
for the fourth quarter of 2020 were above the high end of the
Company’s guidance primarily due to CTR conversions, reactivations
and the results of workovers. Fourth quarter 2020 sales volumes
were comprised of 734,548 barrels (“Bbls”) of oil and 730,337
thousand cubic feet (“Mcf”) of natural gas.
For the fourth quarter of 2020, the Company
realized an average sales price of $40.48 per barrel for crude oil
and $2.21 per Mcf for natural gas. The combined average realized
sales price for the period was $36.61 per Boe versus $35.82 per Boe
for the third quarter of 2020 and $49.59 per Boe in the fourth
quarter of 2019. The average price differential the Company
experienced from WTI posting4 price in the fourth quarter of 2020
was approximately ($2.00) per barrel of crude oil.
Revenues of $31.4 million for the fourth quarter
of 2020 were essentially flat with the third quarter of 2020 and
down 40% from the fourth quarter of 2019 due to lower sales volumes
and realized pricing.
Oil and Natural Gas Production
Costs: Lease Operating Expense (“LOE”), which includes
base lease operating expenses, expense workovers, and facilities
maintenance, was $9.1 million, or $10.65 per Boe, in the fourth
quarter of 2020 versus $8.9 million, or $10.11 per Boe, for the
third quarter of 2020, an increase of 5%, primarily due to lower
sales volumes and higher workover costs. LOE for the fourth quarter
of 2020 was 22% lower than $11.8 million for the fourth quarter of
2019, and 5% lower than the fourth quarter of 2019 per Boe of
$11.16. Ad valorem taxes were $0.7 million for the fourth quarter
of 2020, $0.8 million in the third quarter of 2020, and $0.3
million for the fourth quarter of 2019. Full year 2020 ad valorem
taxes were $3.1 million compared to $3.4 million for full year
2019, with the decrease primarily associated with lower revenues
and well counts year-over-year.
Production Taxes: Production
taxes were $1.75 per Boe in the fourth quarter of 2020 compared to
$1.62 per Boe in the third quarter of 2020 and $2.21 per Boe in
fourth quarter of 2019.
Depreciation, Depletion and Amortization
(“DD&A”) and Asset Retirement Obligation Accretion:
DD&A was $13.04 per Boe for the fourth quarter of 2020 compared
to $12.32 per Boe for the third quarter of 2020 and $13.81 in the
fourth quarter of 2019. Asset retirement obligation accretion was
$0.25 per Boe for the fourth quarter of 2020 compared to $0.26 per
Boe for the third quarter of 2020 and $0.25 in the fourth quarter
of 2019.
General and Administrative Expenses
(“G&A”): G&A, excluding share-based compensation,
was $4.4 million, or $5.09 per Boe, for the fourth quarter of 2020
versus $1.9 million, or $2.20 per Boe, for the third quarter of
2020 and $3.9 million, or $3.73 per Boe, in the fourth quarter of
2019. The increase from the third quarter of 2020 was primarily
associated with management and personnel changes, severance and
non-recurring legal and asset divestiture fees.
Operating Lease
Expense: Operating lease expense was $0.37 per Boe
for the fourth quarter of 2020 compared to $0.34 per Boe for the
third quarter of 2020 and $0.53 in the fourth quarter of 2019.
These expenses are primarily associated with our office leases.
Derivative (Gain) Loss: In the
fourth quarter of 2020, Ring recorded a net loss of $11.5 million
on its commodity derivative contracts, including a realized $3.7
million cash commodity derivative gain and an unrealized $15.2
million non-cash commodity derivative loss, largely due to higher
quarter-end oil and natural gas prices compared to third quarter of
2020. This compared to a net loss of $4.5 million in the third
quarter of 2020, of which $6.2 million was unrealized, and $6.1
million in the fourth quarter of 2019, all of which was
unrealized.
In the fourth quarter of 2020 and through March
16, 2021, Ring added the following derivative positions:
|
|
|
Average |
Weighted
Avg. |
|
|
Date Entered Into |
Production Period |
Instrument |
Daily Volumes |
Swap Price |
|
|
Crude Oil -
WTI |
|
|
(Bbls) |
(per Bbl) |
|
|
|
|
|
|
|
|
|
11/25/2020 |
Calendar
year 2021 |
Swaps |
2,000 |
$45.37 |
|
|
12/02/2020 |
Calendar
year 2021 |
Swaps |
500 |
$45.38 |
|
|
12/03/2020 |
Calendar
year 2021 |
Swaps |
500 |
$45.00 |
|
|
12/04/2020 |
Calendar
year 2021 |
Swaps |
500 |
$45.40 |
|
|
12/04/2020 |
Calendar
year 2021 |
Swaps |
500 |
$45.60 |
|
|
12/07/2020 |
Calendar
year 2021 |
Swaps |
500 |
$45.96 |
|
|
|
|
|
|
|
|
|
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 |
|
|
|
|
|
|
|
|
|
|
|
|
Average |
Weighted
Avg. |
|
|
Date Entered Into |
Production Period |
Instrument |
Daily Volumes |
Swap Price |
|
|
Natural Gas - Henry Hub |
|
(MMBTU) |
(per MMBTU) |
|
|
|
|
|
|
|
|
|
11/04/2020 |
Calendar
year 2021 |
Swaps |
6,000 |
$2.991 |
|
|
|
|
|
|
|
|
|
11/04/2020 |
Calendar
year 2022 |
Swaps |
5,000 |
$2.7255 |
|
|
|
|
|
|
|
|
|
A full listing of the Company’s current outstanding derivative
positions is included in the tables shown later in this
release.
Interest Expense: Interest
expense, as reported in the income statement, in the fourth quarter
of 2020 was $4.7 million compared with $4.5 million in the third
quarter of 2020 and $4.3 million for the fourth quarter of 2019.
The fourth quarter 2020 included the amortization of additional
deferred financing costs proportionate to the reduction in the
Company’s borrowing base.
Income Tax: Ring recorded a
non-cash income tax provision of $21.2 million in the fourth
quarter of 2020 compared to a non-cash income tax benefit of $0.5
million in the third quarter of 2020 and a non-cash income tax
provision of $2.6 million for the fourth quarter of 2019.
Balance Sheet and Liquidity:
Total liquidity on December 31, 2020 was $40.6 million, consisting
of cash and cash equivalents of $3.6 million and $37.0 million of
availability under Ring’s revolving bank credit facility. At
December 31, 2020, the Company had $313 million in borrowings on
its revolving credit facility, which has a current borrowing base
of $350 million. Ring paid down $75 million of debt from the
maximum amount drawn during full year 2020, including $47 million
in the fourth quarter. The Company is targeting further debt
reduction in 2021 based on expected additional free cash flow
generation as well as potential asset sales during 2021.
The next regularly scheduled bank
redetermination is scheduled for May 1, 2021. Ring is currently in
compliance with all applicable covenants of its revolving credit
facility agreement.
Capital Expenditures: Ring’s
original plan for 2020 included drilling 18 horizontal wells on the
Northwest Shelf and performing workovers and extensive
infrastructure projects on its Northwest Shelf, Central Basin
Platform and Delaware Basin assets. Four of the 18 wells were
drilled and completed in the first quarter. However, in early
March, due to an uncertain commodity outlook primarily due to the
COVID-19 pandemic, the Company suspended its drilling and
completion activities. During full year 2020, Ring performed 29 CTR
projects, including eight in the fourth quarter. Capital
expenditures in the fourth quarter of 2020 were $7.8 million.
Capital expenditures for full year 2020 totaled $30.0 million.
Equity Offerings
In October 2020, the Company closed on an
underwritten public offering of (i) 9,575,800 Common Shares, (ii)
13,428,500 Pre-Funded Warrants and (iii) 23,004,300 Common Warrants
at a combined purchase price of $0.70. This included a partial
exercise of the over-allotment. The Common Warrants have a term of
five years and an exercise price of $0.80 per share. Gross proceeds
totaled approximately $16.1 million.
Concurrently with the underwritten public
offering, the Company closed on a registered direct offering of (i)
3,500,000 Common Shares, (ii) 3,300,000 Pre-Funded Warrants and
(iii) 6,800,000 Common Warrants at a combined purchase price of
$0.70. The Common Warrants have a term of five years and an
exercise price of $0.80 per share. Gross proceeds totaled
approximately $4.8 million.
Total gross proceeds from the 2020 underwritten
public offering and the registered direct offering aggregated $20.8
million, with net proceeds aggregating $19.4 million.
2021 Capital Investment Program &
Sales Volumes Outlook
Leveraging the expertise of a reconstituted
Board of Directors and executive management team, Ring has
developed and is executing a strategic vision based on the
following key principles:
-
Continuing to generate free cash flow to improve and build a
sustainable financial foundation;
-
Maintaining operational excellence with a strong commitment to
safety, the environment, Ring’s employees, and the communities in
which we work and operate;
-
Pursuing rigorous capital discipline focused on Ring’s highest
returning opportunities;
-
Improving margins and driving value by targeting additional
operating cost reductions and capital efficiencies; and
-
Strengthening the balance sheet by steadily paying down debt,
divesting non-core assets and becoming a peer leader in Debt/EBITDA
metrics.
In alignment with the Company’s strategic
efforts and supported by a rising oil price environment, Ring
initiated a targeted Northwest Shelf drilling program in early
December 2020 that focuses on the Company’s highest rate-of-return
inventory in Yoakum County, Texas. Four Northwest Shelf San Andres
wells were drilled in December and January, including three
1.5-mile horizontal wells and one 1.0-mile horizontal well, with
all wells now completed and brought online. Early production
results have been above expectations and Ring will provide
additional details after results are available.
For full year 2021, the Company currently
expects total capital spending of $44 million to $48 million, which
includes the estimated cost to drill up to six to eight horizontal
wells and complete eight to 10 horizontal wells primarily in its
Northwest Shelf asset area. Its full year capital spending outlook
includes targeted well reactivations, workovers, infrastructure
upgrades, and continuing its successful CTR program in its
Northwest Shelf and Central Basin Platform areas. Also included in
the full year estimate is anticipated spending for leasing,
contractual drilling obligations and non-operated drilling,
completion and capital workovers. Ring expects to generate
significant free cash flow after all expenses and costs, including
capital expenditures. All 2021 planned capital expenditures will be
fully funded by cash on hand and cash from operations, and excess
free cash flow is currently targeted for debt reduction.
As previously announced on February 22, 2021,
the Company is planning to launch a sales process during the second
quarter of 2021 to divest all of Ring’s Delaware Basin assets,
subject to market conditions. The Company anticipates using the net
proceeds from the potential sale to further reduce its debt
position.
Supported by its targeted development program
and continued execution of its successful CTR initiatives, Ring
currently forecasts full year 2021 sales volumes to be 3% to 8%
higher than the full year 2020 average sales volumes of 8,790
Boe/d.
Full Year 2020 Financial
Review
The Company reported a net loss for full year
2020 of $253.4 million, or $3.48 per share, and Adjusted Net Income
of $20.7 million, or $0.28 per share. For the full year 2019, Ring
reported net income of $29.5 million, or $0.44 per share, and
Adjusted Net Income of $34.3 million, or $0.51 per share. The
Company generated Adjusted EBITDA of $86.1 million, or $1.18 per
diluted share, for the full year 2020 compared to $121.4 million,
or $1.82 per diluted share, in 2019, with the decline driven
primarily by lower realized pricing and sales volumes, partially
offset by targeted cost reductions and increased operational
efficiencies.
Revenues totaled $113.0 million for 2020
compared with $195.7 million in 2019, with the reduction due
primarily to decreases in commodity prices and sales volumes. Net
cash provided by operating activities for the twelve months ended
December 31, 2020 was $72.2 million compared with $106.6 million in
2019. Free Cash Flow totaled $39.7 million in 2020 compared with
$(28.8) million in 2019.
Net sales for full year 2020 were 8,790 Boe/d,
or 3,217,278 Boe, comprised of 2,801,528 Bbls of oil and 2,494,502
Mcf of natural gas. Full year 2019 net sales averaged 10,819 Boe/d,
or 3,948,871 Boe, which included 3,536,126 Bbls of oil and
2,476,472 Mcf of natural gas. The year-over-year decrease was
driven by a substantial reduction in the Company’s development
program activities due to the decline in crude oil prices in March
2020 primarily as a result of COVID-19 and natural decline.
Partially offsetting the impact was Ring’s highly successful CTR
program designed to mitigate production declines and well failure
rates at a much lower cost than utilizing current electrical
submersible pump technology for artificial production lift.
For the full year 2020, the Company’s realized
crude oil sales price was $38.95 per barrel and natural gas sales
price was $1.57 per Mcf. The combined average sales price was
$35.13 per Boe compared to a realized sales price of $49.56 per Boe
for full year 2019.
For the full year 2020, LOE decreased 25% to
$33.8 million from $45.1 million for full year 2019, and 8% on a
per BOE basis from $11.42 in 2019 to $10.52 for 2020. Driving the
year-over-year decrease was the Company’s focus on cost reductions
during the pandemic-induced downturn. This included reducing
overhead, expensive repairs, and the conversion of 29 electrical
submersible pumps to rod pumps, which have an overall lower
operating cost. In addition, artificial lift optimization has
continued to reduce overall well failure rates, resulting in lower
well downtime and further reductions to operating costs. Production
taxes totaled $5.2 million, or $1.63 per Boe, in 2020, compared to
$9.1 million, or $2.31 per Boe, in 2019.
For the full year 2020, G&A, including
share-based compensation, was $16.9 million, down 15% compared with
full year 2019 G&A of $19.9 million. For the full year 2020,
G&A, excluding share-based compensation, was $11.5 million, a
31% reduction from full year 2019 of $16.8 million. The decrease
year-over-year was primarily due to right-sizing the organization
to match operational activity in response to a reduced oil price
environment. G&A, excluding share-based compensation, per Boe
was $3.58 in 2020, down 16% from $4.25 in 2019.
For the full year 2020, the Company recorded a
non-cash income tax benefit of $6.0 million compared to a non-cash
income tax provision of $13.8 million in full year 2019. 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 of $50.6 million. The Company was
in a deferred tax asset position as a result of the ceiling test
write downs recorded during 2020. No valuation allowance was
recorded for the year ended December 31, 2019.
Year-End 2020 Proved
Reserves
The Company's year-end 2020 SEC proved reserves
were 76.5 MMBoe, down modestly from 81.1 MMBoe at year-end 2019.
Ring recorded net upward revisions of 1.3 MMBoe in 2020 primarily
related to additions, improved well performance and technical
revisions that were offset by reductions of 2.7 MMBoe due to lower
commodity prices and 3.2 MMBoe of production.
The SEC twelve-month first day of the month
average prices used for year-end 2020 were $36.04 per barrel of
crude oil (WTI) and $1.99 per MMBtu of natural gas (Henry Hub),
both before adjustment for quality, transportation, fees, energy
content, and regional price differentials, while for year-end 2019
they were $52.19 per barrel of crude oil and $2.58 per MMBtu of
natural gas.
Year-end 2020 SEC proved reserves were comprised
of approximately 87% crude oil and 13% natural gas. At year end,
approximately 57.5% of 2020 proved reserves were classified as
proved developed and 42.5% as proved undeveloped.
Ring’s reserve life ratio at year-end 2020,
based on year-end 2020 SEC proved reserves and 2020 production was
23.8 years.
The present value of the Company’s reported SEC
proved reserves, discounted at 10% ("PV-10"), at year-end 2020 was
$556 million, down about 40% from $923 million at the end of
2019.
Summary Reconciliation Ring Energy, Inc. |
|
|
|
|
|
|
|
|
|
|
Oil |
|
Gas |
|
Net |
|
|
|
|
|
(Bbl) |
|
(Mcf) |
|
(Boe) |
|
PV-10(1) |
|
|
|
|
|
|
|
|
|
|
Balance, December 31, 2019 |
71,359,014 |
|
|
58,271,882 |
|
|
81,070,994 |
|
|
$ |
923,175,051 |
|
|
|
|
|
|
|
|
|
|
|
Improved
recovery |
3,495,210 |
|
|
1,824,310 |
|
|
3,799,262 |
|
|
|
|
|
Production |
(2,801,528 |
) |
|
(2,494,501 |
) |
|
(3,217,278 |
) |
|
|
|
|
Upward
revisions of estimates |
2,591,965 |
|
|
6,158,076 |
|
|
3,618,311 |
|
|
|
|
|
Downward
revisions of estimates due to well performance |
(4,484,425 |
) |
|
44,370 |
|
|
(4,477,030 |
) |
|
|
|
|
Downward
revisions of estimates due to commodity prices |
(2,313,890 |
) |
|
(2,303,700 |
) |
|
(2,697,840 |
) |
|
|
|
|
Downward
revisions of estimates due to removal of undeveloped locations |
(1,582,060 |
) |
|
(195,410 |
) |
|
(1,614,628 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, December 31, 2020 |
66,264,286 |
|
|
61,305,027 |
|
|
76,481,791 |
|
|
$ |
556,871,253 |
|
|
|
|
|
|
|
|
|
|
(1) PV-10 for this presentation excludes any provision for asset
retirement obligations or income taxes.
In accordance with guidelines established by the
SEC, estimated proved reserves as of December 31, 2020 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, 2020. The SEC average prices used for year-end
2020 were $36.04 per barrel of crude oil (WTI) and $1.99 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, |
|
2020 |
|
|
2019 |
|
|
|
|
|
|
|
|
Future cash flows |
|
$ |
2,682,488,655 |
|
|
$ |
3,825,773,515 |
|
Future
production costs |
|
|
(821,515,126 |
) |
|
|
(964,887,856 |
) |
Future
development costs |
|
|
(244,323,270 |
) |
|
|
(252,457,833 |
) |
Future
income taxes |
|
|
(208,645,934 |
) |
|
|
(424,715,966 |
) |
Future net
cash flows |
|
|
1,408,004,325 |
|
|
|
2,183,711,860 |
|
10% annual
discount for estimated timing of cash flows |
|
|
(852,133,072 |
) |
|
|
(1,260,536,809 |
) |
|
|
|
|
|
|
|
Standardized Measure of Discounted Future Net Cash
Flows |
|
$ |
555,871,253 |
|
|
$ |
923,175,051 |
|
|
|
|
|
|
|
|
2021 Sales Volumes, Operating Expense and Capital
Spending Guidance
The guidance for the full year 2021 in the table
below represents the Company's current best estimate of the range
of likely future results. Guidance could be affected by the factors
described below in "Safe Harbor Statement".
|
|
|
Full Year |
|
|
|
|
|
|
|
|
2021 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales Volumes: |
|
|
|
|
|
|
|
|
Total
(Boe/d) |
|
9,000 -
9,500 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating Expenses: |
|
|
|
|
|
|
|
|
Lifting
cost(1) (per Boe) |
|
$10.00 -
$10.50 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital Program: |
|
|
|
|
|
|
|
|
Number of
new wells drilled |
|
6 - 8 |
|
|
|
|
|
|
Number of new wells completed |
8 -
10 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital
spending(2) (millions) |
|
$44 -
$48 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) Lifting cost equals lease operating expenses excluding
severance and ad valorem tax divided by the total barrels of oil
equivalent sold during the same period. |
|
|
|
|
|
|
|
|
|
(2) 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
Northwest Shelf and Central Basin Platform areas. Also included is
anticipated spending for leasing, contractural drilling obligations
and non-operated drilling, completion and capital workovers. |
|
|
|
|
|
|
|
|
|
Conference Call Information
Ring will hold a conference call on Wednesday,
March 17, 2021 at 11:00 a.m. ET to discuss its fourth quarter and
full year 2020 financial and operating results, and 2021 plans and
guidance as it implements its new strategic vision. To participate,
interested parties should dial 877-270-2148 at least five minutes
before the call is to begin. Please reference the “Ring Energy
Fourth Quarter 2020 Earnings Conference Call.” International
callers may participate by dialing 412-902-6510. This call will
also be webcast and available on Ring’s web site at
www.ringenergy.com under “Investors” on the “Events” page. An audio
replay will also be available on the Company’s web site 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, 2020, 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
David A. Fowler, Investor RelationsRing Energy, Inc.Office:
432-682-7464dfowler@ringenergy.com
RING ENERGY,
INC. |
Statements
of Operations |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Unaudited) |
|
|
|
|
|
|
|
|
Three Months
Ended |
|
Twelve
Months Ended |
|
|
|
December 31, |
|
|
September 30, |
|
|
December 31, |
|
December 31, |
|
|
|
2020 |
|
|
|
2020 |
|
|
|
2019 |
|
|
|
2020 |
|
|
|
2019 |
|
|
|
|
|
|
|
|
|
|
Oil
and Natural Gas Revenues |
|
$ |
31,351,673 |
|
|
$ |
31,466,544 |
|
|
$ |
52,231,186 |
|
|
$ |
113,025,138 |
|
|
$ |
195,702,831 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Costs and Operating Expenses |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Oil and
natural gas production costs (including ad valorem taxes) |
|
|
9,840,105 |
|
|
|
9,678,011 |
|
|
|
12,040,300 |
|
|
|
36,968,873 |
|
|
|
48,496,225 |
|
Oil and
natural gas production taxes |
|
|
1,497,044 |
|
|
|
1,427,041 |
|
|
|
2,327,383 |
|
|
|
5,228,090 |
|
|
|
9,130,379 |
|
Depreciation, depletion and amortization |
|
|
11,162,567 |
|
|
|
10,826,989 |
|
|
|
14,544,775 |
|
|
|
43,010,660 |
|
|
|
56,204,269 |
|
Ceiling test
impairment |
|
|
129,564,000 |
|
|
|
- |
|
|
|
- |
|
|
|
277,501,943 |
|
|
|
- |
|
Asset
retirement obligation accretion |
|
|
212,503 |
|
|
|
230,784 |
|
|
|
262,321 |
|
|
|
906,616 |
|
|
|
943,707 |
|
Operating
lease expense |
|
|
319,483 |
|
|
|
295,631 |
|
|
|
554,755 |
|
|
|
1,196,372 |
|
|
|
925,217 |
|
General and
administrative expense (including share-based compensation) |
|
|
7,164,619 |
|
|
|
2,496,927 |
|
|
|
4,579,634 |
|
|
|
16,874,050 |
|
|
|
19,866,706 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Costs and Operating Expenses |
|
|
159,760,321 |
|
|
|
24,955,383 |
|
|
|
34,309,168 |
|
|
|
381,686,604 |
|
|
|
135,566,503 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Loss) Income from Operations |
|
|
(128,408,648 |
) |
|
|
6,511,161 |
|
|
|
17,922,018 |
|
|
|
(268,661,466 |
) |
|
|
60,136,328 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other Income (Expense) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest
income |
|
|
1 |
|
|
|
1 |
|
|
|
6 |
|
|
|
8 |
|
|
|
13,511 |
|
Interest
expense |
|
|
(4,658,826 |
) |
|
|
(4,457,250 |
) |
|
|
(4,276,122 |
) |
|
|
(17,617,614 |
) |
|
|
(13,865,556 |
) |
Realized
gain on derivatives |
|
|
3,708,523 |
|
|
|
1,726,373 |
|
|
|
- |
|
|
|
22,522,591 |
|
|
|
- |
|
Unrealized
loss on change in fair value of derivatives |
|
|
(15,243,222 |
) |
|
|
(6,228,453 |
) |
|
|
(6,066,991 |
) |
|
|
(1,156,523 |
) |
|
|
(3,000,078 |
) |
Deposit
forfeiture income |
|
|
5,500,000 |
|
|
|
- |
|
|
|
- |
|
|
|
5,500,000 |
|
|
|
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
Other Income (Expense) |
|
|
(10,693,524 |
) |
|
|
(8,959,329 |
) |
|
|
(10,343,107 |
) |
|
|
9,248,462 |
|
|
|
(16,852,123 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Loss) Income Before Tax Provision |
|
|
(139,102,172 |
) |
|
|
(2,448,168 |
) |
|
|
7,578,911 |
|
|
|
(259,413,004 |
) |
|
|
43,284,205 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Benefit From (Provision For) Income Taxes |
|
|
(21,152,105 |
) |
|
|
486,565 |
|
|
|
(2,552,217 |
) |
|
|
6,001,176 |
|
|
|
(13,787,654 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
(Loss) Income |
|
$ |
(160,254,277 |
) |
|
$ |
(1,961,603 |
) |
|
$ |
5,026,694 |
|
|
$ |
(253,411,828 |
) |
|
$ |
29,496,551 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic (Loss) Earnings per Share |
|
$ |
(1.83 |
) |
|
$ |
(0.03 |
) |
|
$ |
0.07 |
|
|
$ |
(3.48 |
) |
|
$ |
0.44 |
|
Diluted (Loss) Earnings per Share |
|
$ |
(1.83 |
) |
|
$ |
(0.03 |
) |
|
$ |
0.07 |
|
|
$ |
(3.48 |
) |
|
$ |
0.44 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
Weighted-Average Shares Outstanding |
|
|
87,503,079 |
|
|
|
67,980,961 |
|
|
|
67,823,981 |
|
|
|
72,891,310 |
|
|
|
66,571,738 |
|
Diluted
Weighted-Average Shares Outstanding |
|
|
87,503,079 |
|
|
|
67,980,961 |
|
|
|
67,835,724 |
|
|
|
72,891,310 |
|
|
|
66,757,028 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
RING ENERGY,
INC. |
|
Condensed
Operating Data |
|
(Unaudited) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended |
|
Twelve
Months Ended |
|
|
|
|
December 31, |
|
|
|
September 30, |
|
|
|
December 31, |
|
December 31, |
|
|
|
|
2020 |
|
|
|
|
2020 |
|
|
|
|
2019 |
|
|
|
2020 |
|
|
|
2019 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net sales volumes: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Oil
(Bbls) |
|
|
734,548 |
|
|
|
|
781,626 |
|
|
|
|
923,384 |
|
|
|
2,801,528 |
|
|
|
3,536,126 |
|
|
Natural gas
(Mcf) |
|
|
730,337 |
|
|
|
|
581,123 |
|
|
|
|
779,099 |
|
|
|
2,494,502 |
|
|
|
2,476,472 |
|
|
Total oil
and natural gas (Boe) (1) |
|
|
856,271 |
|
|
|
|
878,480 |
|
|
|
|
1,053,234 |
|
|
|
3,217,278 |
|
|
|
3,948,871 |
|
|
% Oil |
|
|
86% |
|
|
|
|
89% |
|
|
|
|
88% |
|
|
|
87% |
|
|
|
90% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average
daily equivalent sales (Boe/d) |
|
|
9,307 |
|
|
|
|
9,549 |
|
|
|
|
11,448 |
|
|
|
8,790 |
|
|
|
10,819 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average realized sales prices: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Oil
($/Bbl) |
|
$ |
40.48 |
|
|
|
$ |
38.80 |
|
|
|
$ |
54.93 |
|
|
$ |
38.95 |
|
|
$ |
54.27 |
|
|
Natural gas
($/Mcf) |
|
|
2.21 |
|
|
|
|
1.96 |
|
|
|
|
1.94 |
|
|
|
1.57 |
|
|
|
1.54 |
|
|
Barrel of
oil equivalent ($/Boe) |
|
$ |
36.61 |
|
|
|
$ |
35.82 |
|
|
|
$ |
49.59 |
|
|
$ |
35.13 |
|
|
$ |
49.56 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average costs and expenses per Boe ($/Boe): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Oil and
natural gas production costs (excluding ad valorem taxes) |
|
$ |
10.65 |
|
|
|
$ |
10.11 |
|
|
|
$ |
11.16 |
|
|
$ |
10.52 |
|
|
$ |
11.42 |
|
|
Ad valorem
taxes (2) |
|
|
0.84 |
|
|
|
|
0.91 |
|
|
|
|
0.27 |
|
|
|
0.97 |
|
|
|
0.86 |
|
|
Oil and
natural gas production taxes |
|
|
1.75 |
|
|
|
|
1.62 |
|
|
|
|
2.21 |
|
|
|
1.63 |
|
|
|
2.31 |
|
|
Depreciation, depletion and amortization |
|
|
13.04 |
|
|
|
|
12.32 |
|
|
|
|
13.81 |
|
|
|
13.37 |
|
|
|
14.23 |
|
|
Asset
retirement obligation accretion |
|
|
0.25 |
|
|
|
|
0.26 |
|
|
|
|
0.25 |
|
|
|
0.28 |
|
|
|
0.24 |
|
|
Operating
lease expense |
|
|
0.37 |
|
|
|
|
0.34 |
|
|
|
|
0.53 |
|
|
|
0.37 |
|
|
|
0.23 |
|
|
General and
administrative expense (including share-based compensation) |
|
|
8.37 |
|
|
|
|
2.84 |
|
|
|
|
4.35 |
|
|
|
5.24 |
|
|
|
5.03 |
|
|
General and
administrative expense (excluding share-based compensation) |
|
|
5.09 |
|
|
|
|
2.20 |
|
|
|
|
3.73 |
|
|
|
3.58 |
|
|
|
4.25 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(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. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(2) Ad
valorem taxes used for calculation of per Boe: |
|
|
716,994 |
|
|
|
|
799,417 |
|
|
|
|
281,775 |
|
|
|
3,125,222 |
|
|
|
3,409,064 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
RING ENERGY,
INC. |
|
Balance
Sheets |
|
|
|
|
|
|
|
|
|
|
|
December
31, |
|
December
31, |
|
|
|
2020 |
|
2019 |
|
|
|
|
|
|
|
|
|
ASSETS |
|
|
|
|
|
|
|
Current Assets |
|
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
3,578,634 |
|
|
$ |
10,004,622 |
|
|
Accounts
receivable |
|
|
14,997,979 |
|
|
|
22,909,195 |
|
|
Joint
interest billing receivable |
|
|
1,327,262 |
|
|
|
1,812,469 |
|
|
Derivative
receivable |
|
|
499,906 |
|
|
|
- |
|
|
Prepaid
expenses and other assets |
|
|
396,109 |
|
|
|
3,982,255 |
|
|
Total Current Assets |
|
|
20,799,890 |
|
|
|
38,708,541 |
|
|
|
|
|
|
|
|
|
|
Properties and Equipment |
|
|
|
|
|
|
|
Oil and
natural gas properties subject to amortization |
|
|
836,514,815 |
|
|
|
1,083,966,135 |
|
|
Financing
lease asset subject to depreciation |
|
|
858,513 |
|
|
|
858,513 |
|
|
Fixed assets
subject to depreciation |
|
|
1,520,890 |
|
|
|
1,465,551 |
|
|
Total Properties and Equipment |
|
|
838,894,218 |
|
|
|
1,086,290,199 |
|
|
Accumulated
depreciation, depletion and amortization |
|
|
(200,111,658 |
) |
|
|
(157,074,044 |
) |
|
Net
Properties and Equipment |
|
|
638,782,560 |
|
|
|
929,216,155 |
|
|
|
|
|
|
|
|
|
|
Operating Lease Asset |
|
|
1,494,399 |
|
|
|
1,867,044 |
|
|
Properties and Equipment |
|
|
2,379,348 |
|
|
|
3,214,408 |
|
|
|
|
|
|
|
|
|
|
TOTAL ASSETS |
|
$ |
663,456,197 |
|
|
$ |
973,006,148 |
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS' EQUITY |
|
|
|
|
|
|
|
Current Liabilities |
|
|
|
|
|
|
|
Accounts
payable |
|
$ |
32,500,081 |
|
|
$ |
54,635,602 |
|
|
Financing
lease liability |
|
|
295,311 |
|
|
|
280,970 |
|
|
Operating
lease liability |
|
|
859,017 |
|
|
|
1,175,904 |
|
|
Derivative
liabilities |
|
|
3,287,328 |
|
|
|
3,000,078 |
|
|
Total Current Liabilities |
|
|
36,941,737 |
|
|
|
59,092,554 |
|
|
|
|
|
|
|
|
|
|
Deferred
income taxes |
|
|
- |
|
|
|
6,001,176 |
|
|
Revolving
line of credit |
|
|
313,000,000 |
|
|
|
366,500,000 |
|
|
Financing
lease liability, less current portion |
|
|
126,857 |
|
|
|
424,126 |
|
|
Operating
lease liability, less current portion |
|
|
635,382 |
|
|
|
691,140 |
|
|
Derivative
liabilities |
|
|
869,273 |
|
|
|
- |
|
|
Asset
retirement obligations |
|
|
17,117,135 |
|
|
|
16,787,219 |
|
|
|
|
|
|
|
|
|
|
Total Liabilities |
|
|
368,690,384 |
|
|
|
449,496,215 |
|
|
|
|
|
|
|
|
|
|
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; 85,568,287
shares and 67,993,797 shares issued and outstanding,
respectively |
|
|
85,568 |
|
|
|
67,994 |
|
|
Additional
paid-in capital |
|
|
550,951,415 |
|
|
|
526,301,281 |
|
|
Accumulated
deficit |
|
|
(256,271,170 |
) |
|
|
(2,859,342 |
) |
|
|
|
|
|
|
|
|
|
Total Stockholders' Equity |
|
|
294,765,813 |
|
|
|
523,509,933 |
|
|
|
|
|
|
|
|
|
|
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY |
|
$ |
663,456,197 |
|
|
$ |
973,006,148 |
|
|
|
|
|
|
|
|
|
|
RING ENERGY,
INC. |
|
Statements
of Cash Flows |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Unaudited) |
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended |
|
|
Twelve
Months Ended |
|
|
|
|
|
December 31, |
|
|
|
September 30, |
|
|
|
December 31, |
|
|
December 31, |
|
|
|
|
|
2020 |
|
|
|
2020 |
|
|
|
2019 |
|
|
|
2020 |
|
|
2019 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash Flows From Operating Activities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net (loss)
income |
|
$ |
(160,254,277 |
) |
|
|
$ |
(1,961,603 |
) |
|
|
$ |
5,026,694 |
|
|
|
$ |
(253,411,828 |
) |
|
$ |
29,496,551 |
|
|
|
Adjustments
to reconcile net (loss) income to net cash provided by operating
activities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation, depletion and amortization |
|
|
11,162,567 |
|
|
|
|
10,826,989 |
|
|
|
|
14,544,775 |
|
|
|
|
43,010,660 |
|
|
|
56,204,269 |
|
|
|
Ceiling test impairment |
|
|
129,564,000 |
|
|
|
|
- |
|
|
|
|
- |
|
|
|
|
277,501,943 |
|
|
|
- |
|
|
|
Accretion expense |
|
|
212,503 |
|
|
|
|
230,784 |
|
|
|
|
262,321 |
|
|
|
|
906,616 |
|
|
|
943,707 |
|
|
|
Amortization of deferred financing costs |
|
|
622,861 |
|
|
|
|
189,083 |
|
|
|
|
991,310 |
|
|
|
|
1,190,109 |
|
|
|
991,310 |
|
|
|
Share-based compensation |
|
|
2,807,006 |
|
|
|
|
565,819 |
|
|
|
|
646,590 |
|
|
|
|
5,364,162 |
|
|
|
3,082,625 |
|
|
|
Shares issued for services |
|
|
23,800 |
|
|
|
|
- |
|
|
|
|
- |
|
|
|
|
23,800 |
|
|
|
- |
|
|
|
Deferred income tax (benefit) expense |
|
|
21,598,750 |
|
|
|
|
(525,218 |
) |
|
|
|
2,002,405 |
|
|
|
|
(3,975,170 |
) |
|
|
9,500,517 |
|
|
|
Excess tax (benefit) expense related to share-based
compensation |
|
|
(446,645 |
) |
|
|
|
38,653 |
|
|
|
|
118,064 |
|
|
|
|
(2,026,006 |
) |
|
|
3,855,389 |
|
|
|
Adjustment to deferred tax asset for change in effective tax
rate |
|
|
- |
|
|
|
|
- |
|
|
|
|
431,748 |
|
|
|
|
- |
|
|
|
431,748 |
|
|
|
Change in fair value of derivative instruments |
|
|
15,243,222 |
|
|
|
|
6,228,453 |
|
|
|
|
6,066,991 |
|
|
|
|
1,156,523 |
|
|
|
3,000,078 |
|
|
|
Changes in
assets and liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounts receivable |
|
|
(1,970,509 |
) |
|
|
|
(5,678,392 |
) |
|
|
|
(2,940,392 |
) |
|
|
|
7,896,517 |
|
|
|
(10,035,648 |
) |
|
|
Prepaid expenses and retainers |
|
|
102,501 |
|
|
|
|
85,785 |
|
|
|
|
4,182,032 |
|
|
|
|
3,586,146 |
|
|
|
(1,878,667 |
) |
|
|
Accounts payable |
|
|
8,845,188 |
|
|
|
|
4,824,895 |
|
|
|
|
13,375,705 |
|
|
|
|
(8,380,594 |
) |
|
|
12,320,308 |
|
|
|
Settlement of asset retirement obligation |
|
|
(255,018 |
) |
|
|
|
(108,025 |
) |
|
|
|
(680,234 |
) |
|
|
|
(683,623 |
) |
|
|
(1,295,966 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
Cash Provided by Operating Activities |
|
|
27,255,949 |
|
|
|
|
14,717,223 |
|
|
|
|
44,028,009 |
|
|
|
|
72,159,255 |
|
|
|
106,616,221 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash Flows From Investing Activities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Payments for
the Wishbone Acquisition |
|
|
- |
|
|
|
|
- |
|
|
|
|
(15,935,028 |
) |
|
|
|
- |
|
|
|
(276,061,594 |
) |
|
|
Payments to
purchase oil and natural gas properties |
|
|
(127,880 |
) |
|
|
|
(171,999 |
) |
|
|
|
(264,931 |
) |
|
|
|
(1,317,313 |
) |
|
|
(3,400,411 |
) |
|
|
Proceeds
from divestiture of oil and natural gas properties |
|
|
(4,500,000 |
) |
|
|
|
4,500,000 |
|
|
|
|
8,547,074 |
|
|
|
|
- |
|
|
|
8,547,074 |
|
|
|
Payments to
develop oil and natural gas properties |
|
|
(8,871,408 |
) |
|
|
|
(3,283,558 |
) |
|
|
|
(30,121,203 |
) |
|
|
|
(42,457,745 |
) |
|
|
(152,125,320 |
) |
|
|
Purchase of
fixed assets subject to depreciation |
|
|
(55,339 |
) |
|
|
|
- |
|
|
|
|
- |
|
|
|
|
(55,339 |
) |
|
|
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
Cash Used in Investing Activities |
|
|
(13,554,627 |
) |
|
|
|
1,044,443 |
|
|
|
|
(37,774,088 |
) |
|
|
|
(43,830,397 |
) |
|
|
(423,040,251 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash Flows From Financing Activities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Proceeds
from revolving line of credit |
|
|
- |
|
|
|
|
- |
|
|
|
|
- |
|
|
|
|
21,500,000 |
|
|
|
327,000,000 |
|
|
|
Payments on
revolving line of credit |
|
|
(47,000,000 |
) |
|
|
|
(15,000,000 |
) |
|
|
|
- |
|
|
|
|
(75,000,000 |
) |
|
|
- |
|
|
|
Proceeds
form issuance of common stock and warrants |
|
|
19,383,131 |
|
|
|
|
- |
|
|
|
|
- |
|
|
|
|
19,383,131 |
|
|
|
- |
|
|
|
Payment of
deferred financing costs |
|
|
(355,049 |
) |
|
|
|
- |
|
|
|
|
(3,781,657 |
) |
|
|
|
(355,049 |
) |
|
|
(3,781,657 |
) |
|
|
Reduction of
financing lease liabilities |
|
|
(71,587 |
) |
|
|
|
(70,629 |
) |
|
|
|
(66,731 |
) |
|
|
|
(282,928 |
) |
|
|
(153,417 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
Cash Used in (Provided by) Investing Activities |
|
|
(28,043,505 |
) |
|
|
|
(15,070,629 |
) |
|
|
|
(3,848,388 |
) |
|
|
|
(34,754,846 |
) |
|
|
323,064,926 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net (Decrease) Increase in Cash |
|
|
(14,342,183 |
) |
|
|
|
691,037 |
|
|
|
|
2,405,533 |
|
|
|
|
(6,425,988 |
) |
|
|
6,640,896 |
|
|
Cash at Beginning of Period |
|
|
17,920,817 |
|
|
|
|
17,229,780 |
|
|
|
|
7,599,089 |
|
|
|
|
10,004,622 |
|
|
|
3,363,726 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash at End of Period |
|
$ |
3,578,634 |
|
|
|
$ |
17,920,817 |
|
|
|
$ |
10,004,622 |
|
|
|
$ |
3,578,634 |
|
|
$ |
10,004,622 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
RING ENERGY,
INC. |
Financial
Commodity Derivative Positions |
As of March
16, 2021 |
|
|
|
|
|
|
|
|
|
|
Average |
Weighted
Avg. |
Weighted
Avg. |
Weighted
Avg. |
Date Entered Into |
Production Period |
Instrument |
Daily Volumes |
Put Price |
Call Price |
Swap Price |
Crude Oil -
WTI |
|
|
(Bbls) |
(per Bbl) |
(per Bbl) |
(per Bbl) |
|
|
|
|
|
|
|
02/25/2020 |
Calendar
year 2021 |
Costless
Collars |
1,000 |
$45.00 |
$54.75 |
|
02/25/2020 |
Calendar
year 2021 |
Costless
Collars |
1,000 |
$45.00 |
$52.71 |
|
02/27/2020 |
Calendar
year 2021 |
Costless
Collars |
1,000 |
$40.00 |
$55.08 |
|
03/02/2020 |
Calendar
year 2021 |
Costless
Collars |
1,500 |
$40.00 |
$55.35 |
|
11/25/2020 |
Calendar
year 2021 |
Swaps |
2,000 |
|
|
$45.37 |
12/02/2020 |
Calendar
year 2021 |
Swaps |
500 |
|
|
$45.38 |
12/03/2020 |
Calendar
year 2021 |
Swaps |
500 |
|
|
$45.00 |
12/04/2020 |
Calendar
year 2021 |
Swaps |
500 |
|
|
$45.40 |
12/04/2020 |
Calendar
year 2021 |
Swaps |
500 |
|
|
$45.60 |
12/07/2020 |
Calendar
year 2021 |
Swaps |
500 |
|
|
$45.96 |
|
|
|
|
|
|
|
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 |
|
|
|
|
|
|
|
|
|
|
Average |
Weighted
Avg. |
Weighted
Avg. |
Weighted
Avg. |
Date Entered Into |
Production Period |
Instrument |
Daily Volumes |
Put Price |
Call Price |
Swap Price |
Natural Gas - Henry Hub |
|
(MMBTU) |
(per MMBTU) |
(per MMBTU) |
(per MMBTU) |
|
|
|
|
|
|
|
11/04/2020 |
Calendar
year 2021 |
Swaps |
6,000 |
|
|
$2.991 |
|
|
|
|
|
|
|
11/04/2020 |
Calendar
year 2022 |
Swaps |
5,000 |
|
|
$2.7255 |
|
|
|
|
|
|
|
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 (Loss) Income 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 on change in fair value of
derivatives, as well an add back of the full valuation against the
Company’s deferred tax assets during the fourth quarter of 2020.
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.
|
|
|
Three Months
Ended |
|
|
Twelve
Months Ended |
|
|
|
|
|
|
December 31, |
|
|
September 30, |
|
|
December 31, |
|
|
December 31, |
|
|
|
|
|
|
2020 |
|
|
2020 |
|
|
2019 |
|
|
2020 |
|
|
2019 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Unaudited
for All Periods) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net (Loss) Income |
|
$ |
(160,254,277 |
) |
|
|
$ |
(1,961,603 |
) |
|
|
$ |
5,026,694 |
|
|
|
$ |
(253,411,828 |
) |
|
|
$ |
29,496,551 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Share-based compensation |
|
|
2,807,006 |
|
|
|
|
565,819 |
|
|
|
|
646,590 |
|
|
|
|
5,364,162 |
|
|
|
|
3,082,625 |
|
|
|
|
|
Ceiling test
write impairment |
|
|
129,564,000 |
|
|
|
|
- |
|
|
|
|
- |
|
|
|
|
277,501,943 |
|
|
|
|
- |
|
|
|
|
|
Unrealized
loss on change in fair value of derivatives |
|
|
15,243,222 |
|
|
|
|
6,228,453 |
|
|
|
|
6,066,991 |
|
|
|
|
1,156,523 |
|
|
|
|
3,000,078 |
|
|
|
|
|
Tax impact
of adjusted items(1) |
|
|
19,126,056 |
|
|
|
|
(1,446,501 |
) |
|
|
|
(1,429,321 |
) |
|
|
|
(9,915,293 |
) |
|
|
|
(1,295,007 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted Net Income |
|
$ |
6,486,007 |
|
|
|
$ |
3,386,168 |
|
|
|
$ |
10,310,954 |
|
|
|
$ |
20,695,507 |
|
|
|
$ |
34,284,247 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted Weighted-Average Shares Outstanding |
|
|
87,503,079 |
|
|
|
|
67,980,961 |
|
|
|
|
67,835,724 |
|
|
|
|
72,891,310 |
|
|
|
|
66,757,028 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted Net Income per Diluted Share |
|
$ |
0.07 |
|
|
|
$ |
0.05 |
|
|
|
$ |
0.15 |
|
|
|
$ |
0.28 |
|
|
|
$ |
0.51 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) For the three and
twelve months ended December 31, 2020, includes adding back the
full valuation against the Company's deferred tax assets of
$50,553,125. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
RING ENERGY, INC.
Non-GAAP Information
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 (loss) income plus net interest expense,
unrealized loss on change in fair value of derivatives, ceiling
test impairment, income tax (benefit) expense, depreciation,
depletion and amortization and accretion, 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) and capital expenditures.
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 (loss) income, 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.
|
|
|
Three Months
Ended |
|
|
Twelve
Months Ended |
|
|
|
|
December 31, |
|
|
September 30, |
|
|
December 31, |
|
|
December 31, |
|
|
|
|
2020 |
|
|
2020 |
|
|
2019 |
|
|
2020 |
|
|
2019 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Unaudited
for All Periods) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net (Loss) Income |
|
$ |
(160,254,277 |
) |
|
|
$ |
(1,961,603 |
) |
|
|
$ |
5,026,694 |
|
|
|
$ |
(253,411,828 |
) |
|
|
$ |
29,496,551 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense, net |
|
|
4,658,825 |
|
|
|
|
4,457,249 |
|
|
|
|
5,267,426 |
|
|
|
|
17,617,606 |
|
|
|
|
14,843,355 |
|
|
|
Unrealized
loss on change in fair value of derivatives |
|
|
15,243,222 |
|
|
|
|
6,228,453 |
|
|
|
|
6,066,991 |
|
|
|
|
1,156,523 |
|
|
|
|
3,000,078 |
|
|
|
Ceiling test
impairment |
|
|
129,564,000 |
|
|
|
|
- |
|
|
|
|
- |
|
|
|
|
277,501,943 |
|
|
|
|
- |
|
|
|
Income tax
(benefit) expense |
|
|
21,152,105 |
|
|
|
|
(486,565 |
) |
|
|
|
2,552,217 |
|
|
|
|
(6,001,176 |
) |
|
|
|
13,787,654 |
|
|
|
Depreciation, depletion and amortization |
|
|
11,162,567 |
|
|
|
|
10,826,989 |
|
|
|
|
14,544,775 |
|
|
|
|
43,010,660 |
|
|
|
|
56,204,269 |
|
|
|
Asset
retirement obligation accretion |
|
|
212,503 |
|
|
|
|
230,784 |
|
|
|
|
262,321 |
|
|
|
|
906,616 |
|
|
|
|
943,707 |
|
|
|
Share-based
compensation |
|
|
2,807,006 |
|
|
|
|
565,819 |
|
|
|
|
646,590 |
|
|
|
|
5,364,162 |
|
|
|
|
3,082,625 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA |
|
$ |
24,545,951 |
|
|
|
$ |
19,861,126 |
|
|
|
$ |
34,367,014 |
|
|
|
$ |
86,144,506 |
|
|
|
$ |
121,358,239 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA Margin |
|
|
78 |
% |
|
|
|
63 |
% |
|
|
|
66 |
% |
|
|
|
76 |
% |
|
|
|
62 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted Weighted-Average Shares Outstanding |
|
|
87,503,079 |
|
|
|
|
67,980,961 |
|
|
|
|
67,835,724 |
|
|
|
|
72,891,310 |
|
|
|
|
66,757,028 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA per Diluted Share |
|
$ |
0.28 |
|
|
|
$ |
0.29 |
|
|
|
$ |
0.51 |
|
|
|
$ |
1.18 |
|
|
|
$ |
1.82 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended |
|
|
Twelve
Months Ended |
|
|
|
|
December 31, |
|
|
September 30, |
|
|
December 31, |
|
|
December 31, |
|
|
|
|
2020 |
|
|
2020 |
|
|
2019 |
|
|
2020 |
|
|
2019 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Unaudited
for All Periods) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA |
|
$ |
24,545,951 |
|
|
|
$ |
19,861,126 |
|
|
|
$ |
34,367,014 |
|
|
|
$ |
86,144,506 |
|
|
|
$ |
121,358,239 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net interest
expense (excluding amortization of deferred financing costs) |
|
|
(4,035,964 |
) |
|
|
|
(4,268,166 |
) |
|
|
|
(4,276,116 |
) |
|
|
|
(16,427,497 |
) |
|
|
|
(13,852,045 |
) |
|
|
Capital expenditures (excluding Northwest Shelf acquisition) |
(7,814,361 |
) |
|
|
|
(4,305,557 |
) |
|
|
|
(13,936,132 |
) |
|
|
|
|
(30,020,131 |
) |
|
|
|
(136,333,135 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Free Cash Flow |
|
$ |
12,695,626 |
|
|
|
$ |
11,287,403 |
|
|
|
$ |
16,154,766 |
|
|
|
$ |
39,696,878 |
|
|
|
$ |
(28,826,941 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended |
|
|
Twelve
Months Ended |
|
|
|
|
December 31, |
|
|
September 30, |
|
|
December 31, |
|
|
December 31, |
|
|
|
|
2020 |
|
|
2020 |
|
|
2019 |
|
|
2020 |
|
|
2019 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Unaudited
for All Periods) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Cash Provided by Operating Activities |
|
$ |
27,255,949 |
|
|
|
$ |
14,717,223 |
|
|
|
$ |
44,028,009 |
|
|
|
$ |
72,159,255 |
|
|
|
$ |
106,616,221 |
|
|
Changes in operating assets and liabilities |
|
|
(6,722,162 |
) |
|
|
|
875,737 |
|
|
|
|
(13,937,111 |
) |
|
|
|
(2,418,446 |
) |
|
|
|
889,973 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash Flow from Operations |
|
$ |
20,533,787 |
|
|
|
$ |
15,592,960 |
|
|
|
$ |
30,090,898 |
|
|
|
$ |
69,740,809 |
|
|
|
$ |
107,506,194 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1 A non-GAAP financial measure; see “Non-GAAP Information” later
in this release for more information including reconciliations to
the most comparable GAAP measures.2 Lifting cost equals lease
operating expenses excluding severance and ad valorem tax divided
by total barrels of oil equivalent sold during the same period.3
Utilizing 2020 SEC prices of $36.04 per Bbl and $1.99 per MMBtu of
gas.4 WTI posting price per Bbl of oil is based on NYMEX.
Ring Energy (AMEX:REI)
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From May 2023 to May 2024