HOUSTON, April 1, 2021 /PRNewswire/ -- American
Resources, Inc., and SK Energy LLC, the investment vehicle of Dr.
Simon Kukes, one of the largest
shareholders of Ring Energy, Inc. (NYSE: REI), announced today that
we are generally encouraged by Ring Energy's actions over the past
year which follows the guidance laid out in our March 2, 2020 letter to the Board of Directors of
Ring Energy, which provided explicit recommendations to strengthen
the Company in the near-term such as:
- Reconstitute the Board of Directors to address entrenchment,
inter-relation among directors, and lack of fresh perspective and
opinion on the Board
- Consolidate office locations and management to a central
location to save G&A and allow for constructive
interaction
- Focus investment on core assets, divest non-core assets when
the market recovers
- Build management credibility with focus on investor relations
and public communications strategy
- Engage major market independent audit firm to enhance Company
credibility and accountability
Following delivery of our March
2020 letter, Ring Energy has implemented most of our
near-term strategy recommendations to some extent, with many
actions following soon after the appointment of new Ring Energy CEO
Paul D. McKinney, who met with
representatives of American Resources and SK Energy in late summer
of 2020 to discuss our March 2020
letter and recommendations.
We believe these corrective actions are the primary reason Ring
Energy's share price has gained over 270% from the week our
March 2020 letter was publicly
delivered through March 25, 2021,
significantly outperforming both the SPDR S&P Oil & Gas
Exploration & Production ETF (XOP - 157% gain) and West Texas
Intermediate Crude Oil (WTI - 88% gain) over the same period.
However, while Ring Energy has enjoyed some success since
implementing these near-term recommended actions, there are many
challenges that still lay ahead for Ring Energy's new management
team and Board, notably regarding shareholder engagement, as
recently evidenced by its announcement via Form 8-K on March 25, 2021 that it is moving its annual
shareholder meeting up from December
2021 to May 25,
2021. While this may seem benign on its face, the effect of
this change is that Ring Energy drastically accelerated the
deadline for delivery of Board of Director nominations and
shareholder proposals to Ring Energy to April 5, 2021, leaving only 5 business days for
shareholders to submit Board nominations and proposals. This
significantly limits shareholders' ability to propose Board
nominations and present shareholder proposals, which is troubling
where, as seen over the last year, shareholders have provided
valuable guidance to the Company which, when followed by the
Company, directly increased shareholder value. This does not
reflect good corporate governance and shareholder relations, and we
suspect that Ring Energy took this action to prevent our group and
other large shareholders from nominating candidates to the Board
and presenting shareholder proposals.
Given the costly nature of proxy solicitations and the recent
positive stock price performance, we are not interested at this
time in nominating Board members or presenting proposals. However,
we will continue to actively monitor the Company, including its
corporate governance and continued execution of its turnaround
plan, as the Company continues to face daunting challenges – it has
a relatively high debt load, high proportion of 2021 hedged volumes
(limiting 2021 cash flow upside), large short interest in the stock
(~15% - 17% of shares outstanding), and a market concern that the
new management team does not have the capital markets experience to
execute a transformative combination, divestiture or acquisition,
which we believe is in the Company's best interest and should be
pursued. Many of these challenges can be fixed fairly easily in the
current improved oil price environment and we implore management
and the Board to continue to pay down debt and seek an eventual
deleveraging transaction.
About SK Energy LLC and Dr. Simon
Kukes
SK Energy LLC is an investment company owned by
Dr. Simon Kukes, a globally-renowned oil and gas industry
executive. Dr. Kukes has held various positions over the years,
including as President and CEO of Tyumen Oil Company (TNK) where he
was involved in the ~$20 billion
merger of TNK and British Petroleum to form TNK-BP in 2003, and as
CEO of Hess Corporation's (NYSE: HES) Samara-Nafta subsidiary,
where he was instrumental in the subsidiary's $2.05 billion sale to Lukoil in 2013. He is
also currently the largest shareholder, CEO and director of PEDEVCO
Corp. (NYSE MKT: PED), an NYSE-listed oil and gas company active in
the Permian and D-J Basins.
About American Resources, Inc.
American Resources,
Inc. ("ARI") is a Houston, Texas
based oil and gas investment, development and operating company
focused on acquisition of underexploited, distressed and/or
undervalued oil and gas assets and companies where ARI believes its
involvement can add value. ARI strives to maximize value through
active management of assets and/or board level participation in its
corporate investments.
About Ring Energy, Inc.
Founded in 2012, Ring Energy
is a Midland, Texas-based oil
and gas exploration, development and production company with
current operations in the Permian Basin of West Texas and
is recognized as the top producing oil basin in North
America.
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SOURCE SK Energy LLC and American Resources, Inc.