Ring Energy, Inc. (NYSE American: REI) (“Ring” or the “Company”)
today reported operational and financial results for the first
quarter of 2022. In addition, the Company provided second quarter
guidance and reiterated its full year 2022 outlook.
First Quarter 2022 and Recent
Highlights
-
Produced sales volumes of 8,870 barrels of oil equivalent per day
(“Boe/d”) (85% oil), which was above the high end of Ring’s
guidance range of 8,500 to 8,700 Boe/d (85% oil);
-
Reported net income of $7.1 million, or $0.06 per diluted share,
compared with net income of $24.1 million, or $0.20 per diluted
share, for the fourth quarter of 2021;
-
Posted Adjusted Net Income1 of $22.3 million, or $0.22 per share,
up more than 125% from $9.9 million, or $0.10 per share, in the
fourth quarter of 2021;
-
Grew Adjusted EBITDA1 by 48% to $35.6 million from $24.0 million
for the fourth quarter of 2021;
-
Generated Cash Flow from Operations1 of $32.3 million and Free Cash
Flow1 of $12.6 million – an increase of 57% and 36%, respectively,
from the fourth quarter of 2021;
-
Paid down $10.0 million of debt on the Company’s revolving credit
facility;
-
Reduced debt to Adjusted trailing 12-month EBITDA (”Leverage”)
ratio to 2.8x compared to 3.5x at year end 2021; Leverage ratio was
less than 2.0x using annualized first quarter 2022 Adjusted
EBITDA;
-
Increased liquidity to $71.4 million – a 16% increase from year end
2021;
-
Drilled six wells (including four in the Central Basin Platform
(“CBP”) and two in the Northwest Shelf (“NWS”) in the first quarter
and placed on production the four CBP wells;
-
Converted four NWS wells from downhole electrical submersible pumps
to rod pumps (“CTRs”), thereby reducing costly workovers and
long-term operating costs; and
-
Provided guidance for the second quarter and reaffirmed the
Company’s full year outlook of 2022.
_______________1 A non-GAAP financial measure;
see “Non-GAAP Information” section in this release for more
information including reconciliations to the most comparable GAAP
measures.
Mr. Paul D. McKinney, Chairman of the Board and
Chief Executive Officer, commented, “We were pleased with our
overall operating and financial results for the first quarter,
which establishes a solid foundation for 2022 and is another clear
representation of the merits of our value-focused, proven strategy.
Our first quarter sales volumes came in above the high end of our
guidance and benefited from placing wells on production sooner than
anticipated and the installation of certain field compressors that
positively benefited natural gas sales volumes. During the first
quarter, we further benefitted from the increased commodity price
environment as the majority of our lower priced oil hedges expired
at the end of last year and we have no natural gas hedges in place
for 2022. Complemented by our continued pursuit of driving further
cost efficiencies throughout the business, we generated almost $36
million of Adjusted EBITDA, which was 48% higher than the fourth
quarter of 2021. The combination of increased operating cash flow
and rigorous capital spending discipline resulted in our 10th
consecutive quarter of generating Free Cash Flow. In fact, our
almost $13 million of Free Cash Flow in the first quarter of 2022
was more than four times what we reported in the first quarter of
2021. We used this to pay down $10 million of debt during the
period, and look forward to further debt reduction as we move
through the remainder of 2022.”
Mr. McKinney continued, “We have been encouraged
with the results from our one-rig continuous drilling program that
was initiated in late January. As in the past, our efforts are
focused on our highest risk-adjusted rate of return projects that
will allow us to profitably grow our production and reserve levels
while maximizing cash flow generation. Complementing our targeted
2022 drilling and completion campaign, during the first quarter we
performed four CTRs – all in the NWS – as part of our successful
program to reduce costly workovers and long-term operating
costs.”
Mr. McKinney concluded, “The first quarter of
2022 marked the beginning of a new chapter for Ring as we moved
from a phased drilling program in 2021 that resulted in some
unevenness in quarterly production last year, to a continuous
drilling program in 2022. We expect this transition will result in
meaningful growth in year-over-year production and cash flow
generation. I appreciate all of the hard work and dedication of our
workforce in executing our development and operational programs,
and driving additional efficiencies that directly benefit our
financial performance. I also want to thank our investors for their
continued support of our efforts and progress building shareholder
value.”
Financial Overview: For the
first quarter of 2022, the Company reported net income of $7.1
million, or $0.06 per diluted share, which included a $13.5 million
before tax non-cash unrealized commodity derivative loss and $1.5
million in before tax share-based compensation. Excluding the
estimated after-tax impact of the adjustments, the Company’s
Adjusted Net Income was $22.3 million, or $0.22 per share. In the
fourth quarter of 2021, the Company reported net income of $24.1
million, or $0.20 per diluted share, which included a $15.2 million
before tax non-cash unrealized commodity derivative gain and $0.9
million in before tax share-based compensation. Excluding the
estimated after-tax impact of these adjustments, the Company’s
Adjusted Net Income was $9.9 million, or $0.10 per share. In the
first quarter of 2021, Ring reported a net loss of $19.1 million,
or $0.19 per share, which included a $25.7 million before tax
non-cash unrealized commodity derivative loss, and $0.4 million in
before tax share-based compensation. Excluding the estimated
after-tax impact of these adjustments, Adjusted Net Income in the
first quarter of 2021 was $7.0 million, or $0.07 per share.
Adjusted EBITDA grew by 48% to $35.6 million for
the first quarter of 2022 from $24.0 million in the fourth quarter
of 2021, with the increase primarily driven by higher realized
pricing. First quarter of 2021 Adjusted EBITDA was $19.0
million.
Free Cash Flow was $12.6 million for the first
quarter of 2022, which was a 36% increase from $9.3 million in the
fourth quarter of 2021 and more than four times higher than $2.9
million for the first quarter of 2021. Primarily contributing to
the increase for the comparative periods was higher realized
pricing partially offset by increased capital
spending.
Adjusted Net Income, Adjusted EBITDA, Cash Flow
from Operations, 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 first quarter of 2022 were
8,870 Boe/d (85% oil), or 798,262 Boe, compared to 9,153 Boe/d (85%
oil), or 842,110 Boe, for the fourth quarter of 2021, and 7,960
Boe/d (85% oil), or 716,422 Boe, in the first quarter of 2021.
First quarter 2022 sales volumes were comprised of 676,215 barrels
(“Bbls”) of oil and 732,283 thousand cubic feet (“Mcf”) of natural
gas.
For the first quarter of 2022, the Company
realized an average sales price of $93.80 per barrel of crude oil
(before the impact of hedging) and $6.49 per Mcf for natural gas.
The combined average realized sales price for the period was $85.41
per Boe, up 21% from $70.85 per Boe for the fourth quarter of 2021,
and 55% higher than $55.14 per Boe in the first quarter of 2021.
The average oil price differential the Company experienced from WTI
NYMEX spot pricing in the first quarter of 2022 was a negative
$0.90 per barrel of crude oil, while the average natural gas price
differential from Henry Hub pricing was a positive $1.81 per
Mcf.
Revenues were $68.2 million for the first
quarter of 2022 compared to $59.7 million for the fourth quarter of
2021 and $39.5 million for the first quarter of 2021. The
comparative period increases of 14% and 73%, respectively, were
substantially driven by higher realized oil pricing.
Lease Operating Expense
(“LOE”): LOE, which includes expensed workovers and
facilities maintenance, was $9.0 million, or $11.22 per Boe, in the
first quarter of 2022 versus $7.7 million, or $9.12 per Boe, in
fourth quarter of 2021 and $8.2 million, or $11.48 per Boe, for the
first quarter of 2021. Contributing to the increase in LOE for both
comparative periods was inflationary cost pressures and a higher
than usual amount of workovers performed to return wells to
production.
Gathering, Transportation and Processing
(“GTP”) Costs: GTP costs, which are associated with
natural gas sales, were $1.62 per Boe in the first quarter of 2022
versus $1.72 per Boe in the fourth quarter of 2021 and $1.31 per
Boe in the first quarter of 2021. The increase in GTP costs
year-over-year was due to processing higher natural gas sales
volumes for the Company’s NWS assets.
Ad Valorem Taxes: Ad valorem
taxes were $1.19 per Boe for the first quarter of 2022 compared to
$0.16 per Boe in the fourth quarter of 2021 and $1.03 per Boe for
the first quarter of 2021. The sequential quarterly increase was
due to adjustments recorded in the fourth quarter of 2021 to
reflect lower assessed property values compared to estimates in
2021.
Production Taxes: Production
taxes were $4.03 per Boe in the first quarter of 2022 compared to
$3.36 per Boe in the fourth quarter of 2021 and $2.59 per Boe in
first quarter of 2021. Production taxes remained steady at 4.7% of
revenue for all three periods.
Depreciation, Depletion and Amortization
(“DD&A”) and Asset Retirement Obligation Accretion:
DD&A was $12.25 per Boe in the first quarter of 2022 versus
$12.44 per Boe for the fourth quarter of 2021 and $11.32 per Boe in
the first quarter of 2021. Asset retirement obligation accretion
was $0.24 per Boe in the first quarter of 2022 compared to $0.22
per Boe for the fourth quarter of 2021 and $0.27 per Boe in the
first quarter of 2021.
Operating Lease Expense:
Operating lease expense was $83,590 for the first quarter of 2022
versus $83,591 for the fourth quarter of 2021 and $271,517 in the
first quarter of 2021. Operating lease expenses are primarily
associated with the Company’s office leases, which includes the
termination of the Tulsa, Oklahoma lease as of March 31, 2021.
General and Administrative Expenses
(“G&A”): G&A, excluding share-based compensation,
was $4.0 million, or $5.01 per Boe, for the first quarter of 2022
versus $4.0 million, or $4.79 per Boe, for the fourth quarter of
2021 and $2.6 million, or $3.57 per Boe, in the first quarter of
2021.
Interest Expense: Interest
expense was $3.4 million in the first quarter of 2022 versus $3.5
million for the fourth quarter of 2021 and $3.7 million for the
first quarter of 2021. Interest expense decreased for both
comparative periods due to a lower average daily balance of
long-term debt.
Derivative (Loss) Gain: In the
first quarter of 2022, Ring recorded a loss of $27.6 million on its
commodity derivative contracts, including a realized $14.1 million
cash commodity derivative loss and an unrealized $13.5 million
non-cash commodity derivative loss. This compared to a net loss of
$4.3 million in the fourth quarter of 2021, including a realized
$19.5 million cash commodity derivative loss and an unrealized
$15.2 million non-cash commodity derivative gain, and a net loss of
$31.6 million in the first quarter of 2021, including a realized
$5.9 million cash commodity derivative loss and an unrealized $25.7
million non-cash commodity derivative loss.
On January 1, 2022, nearly 60% of Ring’s legacy
low-priced crude oil hedges expired allowing for substantially
higher revenue and cash flow in 2022, assuming the current oil
price environment continues. The Company does not have any hedges
in place on its natural gas production. To date in 2022, the
Company added the following crude oil derivative positions (through
May 10, 2022):
|
|
|
|
Average |
Weighted Avg. |
|
Date Entered Into |
Production Period |
Instrument |
Daily Volumes |
Swap Price |
| Crude Oil - WTI |
|
|
(Bbls) |
(per Bbl) |
| |
|
|
|
|
| 02/01/2022 |
Balance of calendar year
2022 |
Swaps |
1,000 |
$83.47(1) |
| |
|
|
|
|
(1) As of March 31, 2022.
A full listing of the Company’s current outstanding crude oil
derivative positions is included in the tables shown later in this
release.
Income Tax: The Company
recorded a non-cash income tax provision of $78,752 in the first
quarter of 2022, compared to a benefit of $51,601 in the fourth
quarter 2021 and no income tax impact for the first quarter of
2021.
Balance Sheet and Liquidity:
Total liquidity at the end of the first quarter of 2022 was $71.4
million, a 16% increase from December 31, 2021 and up 57% from
March 31, 2021. Liquidity at March 31, 2022 consisted of cash and
cash equivalents of $2.1 million and $69.3 million of availability
under Ring’s revolving bank credit facility, which includes a
reduction of $0.8 million for letters of credit. On March 31, 2022,
the Company had $280.0 million in borrowings outstanding on its
revolving credit facility that has a current borrowing base of
$350.0 million. Ring paid down $10.0 million of debt during the
first quarter of 2022 and is targeting further debt reduction
during the remainder of the year depending on market conditions,
the timing of capital spending and other considerations.
In the fourth quarter of 2021, Ring successfully
reaffirmed the Company’s borrowing base under its revolving credit
facility at $350 million. The next regularly scheduled bank
redetermination is scheduled to occur during May 2022. Ring is
currently in compliance with all applicable covenants under its
revolving credit facility agreement.
Capital Expenditures: During
the first quarter of 2022, capital expenditures on an accrual basis
were $19.7 million as the Company utilized a single rig to drill
six wells (including four 1.5-mile lateral wells in the CBP and two
1.0-mile lateral wells in the NWS – with all six wells having a
100% working interest). The four CBP wells were placed on
production in the latter part of the first quarter, and the two NWS
wells were placed on production in the second half of April. All
six wells were drilled and completed on schedule and within budget.
During the first quarter of 2022, the Company also performed four
CTR projects in the NWS.
2022 Capital Investment, Sales Volumes,
and Operating Expense Guidance
In response to a continued strong crude oil and
natural gas price environment and following the success of its 2021
drilling program, in late January Ring commenced a 2022 continuous
one-rig drilling program that is focused on the Company’s highest
rate-of-return inventory in its NWS and CBP acreage positions.
For full year 2022, Ring reiterates its outlook
of total capital spending in the range of $120 million to $140
million, which includes the estimated cost to drill 25 to 33
horizontal wells and complete 25 to 30 horizontal wells, primarily
in the Company’s NWS assets. Ring’s full year capital spending
outlook includes targeted well reactivations, workovers,
infrastructure upgrades, and continuing its successful CTR program
in the NWS and the CBP. Also included in the full year estimate is
anticipated spending for leasing, contractual drilling obligations
and non-operated drilling, completion and capital workovers. Based
on the $130 million mid-point of spending guidance, the Company
expects the following estimated allocation of capital investment,
including:
-
82% for drilling, completion, and related equipment and
facilities;
-
12% for CTRs, recompletions and capital workovers; and
-
6% for land, non-operated capital and other investments.
The Company remains focused on generating free
cash flow in 2022, after all expenses, costs and capital
expenditures. The increased level of capital investment in 2022 is
expected to generate almost 10% sales growth at the midpoint of
full year 2022 guidance. All 2022 planned capital expenditures will
be fully funded by cash on hand and cash from operations, and
excess free cash flow is currently targeted for further debt
reduction. The combination of anticipated growth in Adjusted EBITDA
resulting from higher prices and growth in sales volumes, along
with planned further debt reduction, is expected to significantly
reduce Ring’s leverage ratio by year-end
2022.
Supported by its targeted development program
and continued focus on operational excellence, the Company
continues to forecast full year 2022 sales volumes of 9,000 to
9,600 Boe/d (87% oil), compared with full year 2021 average sales
volumes of 8,519 Boe/d (86% oil). For the second quarter of 2022,
Ring currently expects sales to be in the range of 9,000 to 9,400
Boe/d (86% oil).
The guidance in the table below represents the
Company's current good faith estimate of the range of likely future
results for the full year and second quarter of 2022. Guidance
could be affected by the factors discussed below in the "Safe
Harbor Statement" section.
|
|
Full Year |
Q2 |
| |
2022 |
2022 |
| |
|
|
| Sales
Volumes: |
|
|
|
Total (Boe/d) |
9,000 - 9,600 |
9,000 - 9,400 |
|
Oil (Bo/d) |
7,800 - 8,350 |
7,700 - 8,100 |
| |
|
|
| Capital
Program: |
|
|
|
Capital spending(1) (millions) |
$120 - $140 |
$34 - 36 |
| |
|
|
|
Number of new wells drilled |
25 - 33 |
8 - 10 |
|
Number of new wells completed and online |
25 - 30 |
7 - 9 |
| |
|
|
| Operating
Expenses: |
|
|
|
LOE (per Boe) |
$10.90 - $12.00 |
$10.90 - $12.00 |
|
GTP (per Boe) |
$1.60 - $2.00 |
$1.70 - $2.00 |
| |
|
|
(1) 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 NWS and CBP areas. Also included is anticipated spending for
lease costs, contractural drilling obligations and non-operated
drilling, completion and capital workovers.
Conference Call Information
Ring will hold a conference call on Wednesday,
May 11, 2022 at 11:00 a.m. ET to discuss its first quarter 2022
operational and financial results. An updated investor presentation
will be posted to the Company’s website prior to the conference
call.
To participate in the conference call,
interested parties should dial 833-953-2433 at least five minutes
before the call is to begin. Please reference the “Ring Energy
First Quarter 2022 Earnings Conference Call”. International callers
may participate by dialing 412-317-5762. The call will also be
webcast and available on Ring’s website at www.ringenergy.com under
“Investors” on the “News & Events” page. An audio replay will
also be available on the Company’s website 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, 2021, 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
Al Petrie AdvisorsAl Petrie, Senior PartnerPhone:
281-975-2146Email: apetrie@ringenergy.com
|
RING ENERGY, INC. |
|
Condensed Statements of Operations |
|
(Unaudited) |
| |
|
|
|
|
|
Three Months Ended |
|
|
|
March 31, |
|
December 31, |
|
March 31, |
|
|
|
|
2022 |
|
|
|
2021 |
|
|
|
2021 |
|
| |
|
|
| Oil and Natural Gas
Revenues |
|
$ |
68,181,032 |
|
|
$ |
59,667,156 |
|
|
$ |
39,502,532 |
|
| |
|
|
|
|
|
|
|
|
|
| Costs and Operating
Expenses |
|
|
|
|
|
|
|
|
|
| Lease operating expenses |
|
|
8,953,165 |
|
|
|
7,678,140 |
|
|
|
8,226,575 |
|
| Gathering, transportation and
processing costs |
|
|
1,296,858 |
|
|
|
1,449,884 |
|
|
|
935,019 |
|
| Ad valorem taxes |
|
|
951,954 |
|
|
|
131,663 |
|
|
|
737,251 |
|
| Oil and natural gas production
taxes |
|
|
3,218,362 |
|
|
|
2,831,560 |
|
|
|
1,852,762 |
|
| Depreciation, depletion and
amortization |
|
|
9,781,287 |
|
|
|
10,474,159 |
|
|
|
8,108,158 |
|
| Asset retirement obligation
accretion |
|
|
188,242 |
|
|
|
183,383 |
|
|
|
193,744 |
|
| Operating lease expense |
|
|
83,590 |
|
|
|
83,591 |
|
|
|
271,517 |
|
| General and administrative
expense (including share-based compensation) |
|
|
5,522,277 |
|
|
|
4,964,711 |
|
|
|
2,912,991 |
|
| |
|
|
|
|
|
|
|
|
|
| Total Costs and
Operating Expenses |
|
|
29,995,735 |
|
|
|
27,797,091 |
|
|
|
23,238,017 |
|
| |
|
|
|
|
|
|
|
|
|
| Income from
Operations |
|
|
38,185,297 |
|
|
|
31,870,065 |
|
|
|
16,264,515 |
|
| |
|
|
|
|
|
|
|
|
|
| Other Income
(Expense) |
|
|
|
|
|
|
|
|
|
| Interest expense |
|
|
(3,398,361 |
) |
|
|
(3,542,514 |
) |
|
|
(3,741,969 |
) |
| Loss on derivative
contracts |
|
|
(27,596,141 |
) |
|
|
(4,266,942 |
) |
|
|
(31,588,639 |
) |
| |
|
|
|
|
|
|
|
|
|
| Net Other
Expense |
|
|
(30,994,502 |
) |
|
|
(7,809,456 |
) |
|
|
(35,330,608 |
) |
| |
|
|
|
|
|
|
|
|
|
| Income (Loss) Before
Provision for Income Taxes |
|
|
7,190,795 |
|
|
|
24,060,609 |
|
|
|
(19,066,093 |
) |
| |
|
|
|
|
|
|
|
|
|
| (Provision For)
Benefit From Income Taxes |
|
|
(78,752 |
) |
|
|
51,601 |
|
|
|
- |
|
| |
|
|
|
|
|
|
|
|
|
| Net Income
(Loss) |
|
$ |
7,112,043 |
|
|
$ |
24,112,210 |
|
|
$ |
(19,066,093 |
) |
| |
|
|
|
|
|
|
|
|
|
| Basic Earnings (Loss)
per Share |
|
$ |
0.07 |
|
|
$ |
0.24 |
|
|
$ |
(0.19 |
) |
| Diluted Earnings
(Loss) per Share |
|
$ |
0.06 |
|
|
$ |
0.20 |
|
|
$ |
(0.19 |
) |
| |
|
|
|
|
|
|
|
|
|
| Basic Weighted-Average Shares
Outstanding |
|
|
100,192,562 |
|
|
|
99,789,095 |
|
|
|
99,092,715 |
|
| Diluted Weighted-Average
Shares Outstanding |
|
|
124,004,178 |
|
|
|
123,297,240 |
|
|
|
99,092,715 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
RING ENERGY, INC. |
|
Condensed Operating Data |
|
(Unaudited) |
| |
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
|
March 31, |
|
December 31, |
|
March 31, |
|
|
|
|
2022 |
|
|
|
2021 |
|
|
|
2021 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Net sales volumes: |
|
|
|
|
|
|
|
|
|
| Oil (Bbls) |
|
|
676,215 |
|
|
|
715,163 |
|
|
|
610,121 |
|
| Natural gas (Mcf) |
|
|
732,283 |
|
|
|
761,682 |
|
|
|
637,808 |
|
| Total oil and natural gas
(Boe) (1) |
|
|
798,262 |
|
|
|
842,110 |
|
|
|
716,422 |
|
|
% Oil |
|
|
85 |
% |
|
|
85 |
% |
|
|
85 |
% |
|
|
|
|
|
|
|
|
|
|
|
| Average daily equivalent sales
(Boe/d) |
|
|
8,870 |
|
|
|
9,153 |
|
|
|
7,960 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Average realized sales prices: |
|
|
|
|
|
|
|
|
|
| Oil ($/Bbl) |
|
$ |
93.80 |
|
|
$ |
76.35 |
|
|
$ |
58.00 |
|
| Natural gas ($/Mcf) |
|
|
6.49 |
|
|
|
6.65 |
|
|
|
6.46 |
|
| Barrel of oil equivalent
($/Boe) |
|
$ |
85.41 |
|
|
$ |
70.85 |
|
|
$ |
55.14 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Average costs and expenses per Boe ($/Boe): |
|
|
|
|
|
|
|
|
|
| Lease operating expenses |
|
$ |
11.22 |
|
|
$ |
9.12 |
|
|
$ |
11.48 |
|
| Gathering, transportation and
processing costs |
|
|
1.62 |
|
|
|
1.72 |
|
|
|
1.31 |
|
| Ad valorem taxes |
|
|
1.19 |
|
|
|
0.16 |
|
|
|
1.03 |
|
| Oil and natural gas production
taxes |
|
|
4.03 |
|
|
|
3.36 |
|
|
|
2.59 |
|
| Depreciation, depletion and
amortization |
|
|
12.25 |
|
|
|
12.44 |
|
|
|
11.32 |
|
| Asset retirement obligation
accretion |
|
|
0.24 |
|
|
|
0.22 |
|
|
|
0.27 |
|
| Operating lease expense |
|
|
0.10 |
|
|
|
0.10 |
|
|
|
0.38 |
|
| General and administrative
expense (including share-based compensation) |
|
|
6.92 |
|
|
|
5.90 |
|
|
|
4.07 |
|
| General and administrative
expense (excluding share-based compensation) |
|
|
5.01 |
|
|
|
4.79 |
|
|
|
3.57 |
|
|
|
|
|
|
|
|
|
|
|
|
(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.
|
RING ENERGY, INC. |
|
Balance Sheets |
| |
|
(Unaudited) |
|
|
|
|
|
|
March 31, |
|
December 31, |
|
|
|
2022 |
|
2021 |
|
|
|
|
|
|
|
|
|
ASSETS |
|
|
|
|
|
|
| Current
Assets |
|
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
2,139,211 |
|
|
$ |
2,408,316 |
|
| Accounts receivable |
|
|
35,249,566 |
|
|
|
24,026,807 |
|
| Joint interest billing
receivable |
|
|
1,285,459 |
|
|
|
2,433,811 |
|
| Prepaid expenses and other
assets |
|
|
735,144 |
|
|
|
938,029 |
|
| Total Current
Assets |
|
|
39,409,380 |
|
|
|
29,806,963 |
|
| |
|
|
|
|
|
|
| Properties and
Equipment |
|
|
|
|
|
|
| Oil and natural gas properties
subject to amortization |
|
|
903,632,896 |
|
|
|
883,844,745 |
|
| Financing lease asset subject
to depreciation |
|
|
1,422,487 |
|
|
|
1,422,487 |
|
| Fixed assets subject to
depreciation |
|
|
2,089,163 |
|
|
|
2,089,722 |
|
| Total Properties and
Equipment |
|
|
907,144,546 |
|
|
|
887,356,954 |
|
| Accumulated depreciation,
depletion and amortization |
|
|
(245,223,053 |
) |
|
|
(235,997,307 |
) |
| Net Properties and
Equipment |
|
|
661,921,493 |
|
|
|
651,359,647 |
|
| |
|
|
|
|
|
|
| Operating lease
asset |
|
|
1,209,473 |
|
|
|
1,277,253 |
|
| Deferred financing
costs |
|
|
1,514,192 |
|
|
|
1,713,466 |
|
| |
|
|
|
|
|
|
| TOTAL
ASSETS |
|
$ |
704,054,538 |
|
|
$ |
684,157,329 |
|
| |
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS' EQUITY |
|
|
|
|
|
|
| Current
Liabilities |
|
|
|
|
|
|
| Accounts payable |
|
$ |
54,262,245 |
|
|
$ |
46,233,452 |
|
| Income tax liability |
|
|
12,813 |
|
|
|
- |
|
| Financing lease liability |
|
|
247,848 |
|
|
|
316,514 |
|
| Operating lease liability |
|
|
296,023 |
|
|
|
290,766 |
|
| Derivative liabilities |
|
|
42,722,228 |
|
|
|
29,241,588 |
|
| Notes payable |
|
|
219,029 |
|
|
|
586,410 |
|
| Total Current
Liabilities |
|
|
97,760,186 |
|
|
|
76,668,730 |
|
| |
|
|
|
|
|
|
| Non-Current
Liabilities |
|
|
|
|
|
|
| Deferred income taxes |
|
|
156,231 |
|
|
|
90,292 |
|
| Revolving line of credit |
|
|
280,000,000 |
|
|
|
290,000,000 |
|
| Financing lease liability,
less current portion |
|
|
293,615 |
|
|
|
343,727 |
|
| Operating lease liability,
less current portion |
|
|
1,061,591 |
|
|
|
1,138,319 |
|
| Asset retirement
obligations |
|
|
15,524,755 |
|
|
|
15,292,054 |
|
| Total Non-Current
Liabilities |
|
|
297,036,192 |
|
|
|
306,864,392 |
|
| |
|
|
|
|
|
|
| Total
Liabilities |
|
|
394,796,378 |
|
|
|
383,533,122 |
|
| |
|
|
|
|
|
|
| Stockholders'
Equity |
|
|
|
|
|
|
| Preferred stock - $0.001 par
value; 50,000,000 shares authorized; no shares issued or
outstanding |
|
|
- |
|
|
|
- |
|
| Common stock - $0.001 par
value; 225,000,000 shares authorized; 100,192,562 shares and
100,192,562 shares issued and outstanding, respectively |
|
|
100,193 |
|
|
|
100,193 |
|
| Additional paid-in
capital |
|
|
554,994,202 |
|
|
|
553,472,292 |
|
| Accumulated deficit |
|
|
(245,836,235 |
) |
|
|
(252,948,278 |
) |
| Total Stockholders'
Equity |
|
|
309,258,160 |
|
|
|
300,624,207 |
|
| |
|
|
|
|
|
|
| TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY |
|
$ |
704,054,538 |
|
|
$ |
684,157,329 |
|
| |
|
|
|
|
|
|
|
|
|
RING ENERGY, INC. |
|
Statements of Cash Flows |
|
(Unaudited) |
|
|
|
|
|
|
|
Three Months Ended |
|
|
|
March 31, |
|
December 31, |
|
March 31, |
|
|
|
|
2022 |
|
|
|
2021 |
|
|
|
2021 |
|
| |
|
|
|
|
|
|
|
|
|
| Cash Flows From
Operating Activities |
|
|
|
|
|
|
|
|
|
|
Net income (loss) |
|
$ |
7,112,043 |
|
|
$ |
24,112,210 |
|
|
$ |
(19,066,093 |
) |
|
Adjustments to reconcile net income (loss) to net cash provided by
operating activities: |
|
|
|
|
|
|
|
|
|
|
Depreciation, depletion and amortization |
|
|
9,781,287 |
|
|
|
10,474,159 |
|
|
|
8,108,158 |
|
|
Asset retirement obligation accretion |
|
|
188,242 |
|
|
|
183,383 |
|
|
|
193,744 |
|
|
Amortization of deferred financing costs |
|
|
199,274 |
|
|
|
169,349 |
|
|
|
183,027 |
|
|
Share-based compensation |
|
|
1,521,910 |
|
|
|
933,593 |
|
|
|
355,494 |
|
|
Deferred income tax (benefit) expense |
|
|
65,939 |
|
|
|
123,536 |
|
|
|
(1,792,142 |
) |
|
Excess tax (benefit) expense related to share-based
compensation |
|
|
- |
|
|
|
(175,187 |
) |
|
|
1,792,142 |
|
|
Loss on derivative contracts |
|
|
27,596,141 |
|
|
|
4,266,942 |
|
|
|
31,588,639 |
|
|
Cash paid for derivative settlements, net |
|
|
(14,115,501 |
) |
|
|
(19,490,022 |
) |
|
|
(5,920,791 |
) |
|
Changes in assets and liabilities: |
|
|
|
|
|
|
|
|
|
|
Accounts receivable |
|
|
(10,078,098 |
) |
|
|
(4,466,561 |
) |
|
|
(5,968,739 |
) |
|
Prepaid expenses and retainers |
|
|
202,885 |
|
|
|
360,772 |
|
|
|
165,200 |
|
|
Accounts payable |
|
|
2,519,011 |
|
|
|
7,119,652 |
|
|
|
6,293,506 |
|
|
Settlement of asset retirement obligation |
|
|
(553,368 |
) |
|
|
(404,053 |
) |
|
|
(244,461 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
Net Cash Provided by Operating Activities |
|
|
24,439,765 |
|
|
|
23,207,773 |
|
|
|
15,687,684 |
|
| |
|
|
|
|
|
|
|
|
|
| Cash Flows From
Investing Activities |
|
|
|
|
|
|
|
|
|
|
Payments to purchase oil and natural gas properties |
|
|
(360,848 |
) |
|
|
(789,281 |
) |
|
|
(258,970 |
) |
|
Payments to develop oil and natural gas properties |
|
|
(13,860,249 |
) |
|
|
(16,621,196 |
) |
|
|
(11,898,939 |
) |
|
Purchase of fixed assets subject to depreciation |
|
|
(10,114 |
) |
|
|
40,801 |
|
|
|
(19,461 |
) |
|
Sale of fixed assets subject to depreciation |
|
|
8,500 |
|
|
|
- |
|
|
|
- |
|
|
Proceeds from divestiture of oil and natural gas properties |
|
|
- |
|
|
|
- |
|
|
|
2,000,000 |
|
| |
|
|
|
|
|
|
|
|
|
| Net Cash Used in
Investing Activities |
|
|
(14,222,711 |
) |
|
|
(17,369,676 |
) |
|
|
(10,177,370 |
) |
| |
|
|
|
|
|
|
|
|
|
| Cash Flows From
Financing Activities |
|
|
|
|
|
|
|
|
|
|
Proceeds from revolving line of credit |
|
|
10,000,000 |
|
|
|
25,750,000 |
|
|
|
13,000,000 |
|
|
Payments on revolving line of credit |
|
|
(20,000,000 |
) |
|
|
(30,750,000 |
) |
|
|
(20,500,000 |
) |
|
Proceeds form issuance of common stock and warrants |
|
|
- |
|
|
|
126,240 |
|
|
|
161,269 |
|
|
Proceeds from option exercise |
|
|
- |
|
|
|
200,000 |
|
|
|
- |
|
|
Payments for taxes withheld on vested restricted shares |
|
|
- |
|
|
|
(385,330 |
) |
|
|
- |
|
|
Proceeds from notes payable |
|
|
- |
|
|
|
64,580 |
|
|
|
- |
|
|
Payments on notes payable |
|
|
(367,381 |
) |
|
|
(335,321 |
) |
|
|
- |
|
|
Payment of deferred financing costs |
|
|
- |
|
|
|
(27,931 |
) |
|
|
- |
|
|
Reduction of financing lease liabilities |
|
|
(118,778 |
) |
|
|
(118,965 |
) |
|
|
(49,707 |
) |
| |
|
|
|
|
|
|
|
|
|
|
Net Cash Used in Investing Activities |
|
|
(10,486,159 |
) |
|
|
(5,476,727 |
) |
|
|
(7,388,438 |
) |
| |
|
|
|
|
|
|
|
|
|
| Net (Decrease)
Increase in Cash |
|
|
(269,105 |
) |
|
|
361,370 |
|
|
|
(1,878,124 |
) |
| Cash at Beginning of
Period |
|
|
2,408,316 |
|
|
|
2,046,946 |
|
|
|
3,578,634 |
|
| |
|
|
|
|
|
|
|
|
|
| Cash at End of
Period |
|
$ |
2,139,211 |
|
|
$ |
2,408,316 |
|
|
$ |
1,700,510 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
RING ENERGY, INC. |
|
Financial Commodity Derivative Positions |
|
As of May 10, 2022 |
| |
|
|
|
|
| |
|
|
Average |
Weighted Avg. |
|
Date Entered Into |
Production Period |
Instrument |
Daily Volumes |
Swap Price |
| Crude Oil - WTI |
|
|
(Bbls) |
(per Bbl) |
| |
|
|
|
|
| 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 |
| 01/04/2021 |
Calendar year 2022 |
Swaps |
250 |
$47.00 |
| 02/04/2021 |
Calendar year 2022 |
Swaps |
250 |
$50.05 |
| 05/11/2021 |
Calendar year 2022 |
Swaps |
879(1) |
$49.03 |
| 02/01/2022 |
Balance of calendar year
2022 |
Swaps |
1,000 |
$83.47(2) |
| |
|
|
|
|
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 Income (Loss) 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 (gain) on change in fair value
of derivatives. 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 |
|
|
|
March 31, |
|
December 31, |
|
March 31, |
|
|
|
2022 |
|
2021 |
|
2021 |
|
|
|
(Unaudited for All Periods) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Income (Loss) |
|
$ |
7,112,043 |
|
|
$ |
24,112,210 |
|
|
$ |
(19,066,093 |
) |
| |
|
|
|
|
|
|
|
|
|
|
|
Share-based compensation |
|
|
1,521,910 |
|
|
|
933,593 |
|
|
|
355,494 |
|
|
Unrealized loss (gain) on change in fair value of derivatives |
13,480,640 |
|
|
|
(15,223,080 |
) |
|
|
25,667,848 |
|
|
Tax impact of adjusted items |
|
|
164,305 |
|
|
|
30,646 |
|
|
|
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted Net Income |
|
$ |
22,278,898 |
|
|
$ |
9,853,369 |
|
|
$ |
6,957,249 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted-Average Shares Outstanding |
|
|
100,192,562 |
|
|
|
99,789,095 |
|
|
|
99,092,715 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted Net Income per Share |
|
$ |
0.22 |
|
|
$ |
0.10 |
|
|
$ |
0.07 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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 income (loss) plus net interest expense,
unrealized loss (gain) on change in fair value of derivatives,
ceiling test impairment, income tax (benefit) expense,
depreciation, depletion and amortization, 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), capital expenditures and
proceeds from divestiture of oil and natural gas properties. 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 income (loss), 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 |
| |
|
March 31, |
|
December 31, |
|
March 31, |
| |
|
2022 |
|
2021 |
|
2021 |
| |
|
(Unaudited for All Periods) |
| |
|
|
|
|
|
|
|
|
|
|
Net Income (Loss) |
|
$ |
7,112,043 |
|
|
$ |
24,112,210 |
|
|
$ |
(19,066,093 |
) |
| |
|
|
|
|
|
|
|
|
|
|
Interest expense, net |
|
|
3,398,361 |
|
|
|
3,542,514 |
|
|
|
3,741,969 |
|
|
Unrealized loss (gain) on change in fair value of derivatives |
|
|
13,480,640 |
|
|
|
(15,223,080 |
) |
|
|
25,667,848 |
|
|
Income tax provision (benefit) |
|
|
78,752 |
|
|
|
(51,601 |
) |
|
|
- |
|
|
Depreciation, depletion and amortization |
|
|
9,781,287 |
|
|
|
10,474,159 |
|
|
|
8,108,158 |
|
|
Asset retirement obligation accretion |
|
|
188,242 |
|
|
|
183,383 |
|
|
|
193,744 |
|
|
Share-based compensation |
|
|
1,521,910 |
|
|
|
933,593 |
|
|
|
355,494 |
|
| |
|
|
|
|
|
|
|
|
|
| Adjusted
EBITDA |
|
$ |
35,561,235 |
|
|
$ |
23,971,178 |
|
|
$ |
19,001,120 |
|
| |
|
|
|
|
|
|
|
|
|
| Adjusted EBITDA
Margin |
|
|
52 |
% |
|
|
40 |
% |
|
|
48 |
% |
| |
|
|
|
|
|
|
|
|
|
| Weighted-Average Shares
Outstanding |
|
|
100,192,562 |
|
|
|
99,789,095 |
|
|
|
99,092,715 |
|
| |
|
|
|
|
|
|
|
|
|
| Adjusted EBITDA per
Share |
|
$ |
0.35 |
|
|
$ |
0.24 |
|
|
$ |
0.19 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
Three Months Ended |
| |
|
March 31, |
|
December 31, |
|
March 31, |
| |
|
2022 |
|
2021 |
|
2021 |
| |
|
(Unaudited for All Periods) |
| |
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA |
|
$ |
35,561,235 |
|
|
$ |
23,971,178 |
|
|
$ |
19,001,120 |
|
| |
|
|
|
|
|
|
|
|
|
|
Net interest expense (excluding amortization of deferred financing
costs) |
|
|
(3,199,087 |
) |
|
|
(3,373,165 |
) |
|
|
(3,558,942 |
) |
|
Capital expenditures |
|
|
(19,743,693 |
) |
|
|
(11,292,707 |
) |
|
|
(14,525,436 |
) |
|
Proceeds from divestiture of oil and natural gas properties |
|
- |
|
|
|
- |
|
|
|
2,000,000 |
|
| |
|
|
|
|
|
|
|
|
|
| Free Cash
Flow |
|
$ |
12,618,455 |
|
|
$ |
9,305,306 |
|
|
$ |
2,916,742 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
Three Months Ended |
| |
|
March 31, |
|
December 31, |
|
March 31, |
| |
|
2022 |
|
2021 |
|
2021 |
| |
|
(Unaudited for All Periods) |
| |
|
|
|
|
|
|
|
|
|
|
|
Net Cash Provided by Operating Activities |
|
$ |
24,439,765 |
|
|
$ |
23,207,773 |
|
|
$ |
15,687,684 |
|
| Changes in operating assets
and liabilities |
|
|
7,909,570 |
|
|
|
(2,609,810 |
) |
|
|
(245,506 |
) |
| |
|
|
|
|
|
|
|
|
|
|
| Cash Flow from
Operations |
|
$ |
32,349,335 |
|
|
$ |
20,597,963 |
|
|
$ |
15,442,178 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
Ring Energy (AMEX:REI)
Historical Stock Chart
From Jan 2025 to Feb 2025
Ring Energy (AMEX:REI)
Historical Stock Chart
From Feb 2024 to Feb 2025
