Ring Energy, Inc. (NYSE American: REI) (“Ring” or the “Company”)
today reported operational and financial results for the second
quarter of 2022. In addition, Ring provided third quarter guidance
and increased its full year 2022 sales volumes outlook.
Second Quarter 2022
Highlights
-
Recorded quarterly sales revenue of $85.0 million, which was the
highest in the Company’s history;
-
Produced sales volumes of 9,341 barrels of oil equivalent per day
(“Boe/d”) (86% oil) were 5% higher than the first quarter of 2022
and at the higher end of Ring’s guidance range of 9,000 to 9,400
Boe/d (86% oil);
-
Increased Net Income nearly six-fold to $41.9 million, or $0.32 per
diluted share, from $7.1 million, or $0.06 per diluted share, for
the first quarter of 2022;
-
Reported Adjusted Net Income1 of $31.3 million, or $0.29 per share,
which was a 40% increase from $22.3 million, or $0.22 per share, in
the first quarter of 2022;
-
Increased Adjusted EBITDA1 by 33% to $47.4 million from $35.6
million for the first quarter of 2022;
-
Represents the highest level of quarterly Adjusted EBITDA in the
Company’s history:
-
Adjusted EBITDA was $82.9 million in first half of 2022, which was
nearly equal to the $83.3 million generated in full year 2021;
-
Generated Cash Flow from Operations1 of $44.3 million and Free Cash
Flow1 of $2.5 million;
-
Paid down $10.0 million of debt on the Company’s revolving credit
facility;
-
Reduced the debt to trailing 12-month Adjusted EBITDA (”Leverage”)
ratio to 2.1x compared to 3.5x at year end 2021;
-
Increased liquidity to $81.5 million, a 32% increase from year-end
2021;
-
Drilled nine wells, placed on production seven wells (two of which
were drilled in first quarter), and began the completion process on
four wells – all on the Company’s Northwest Shelf (“NWS”)
acreage;
-
Converted four wells (three in the NWS and one in the Central Basin
Platform (“CBP”)) from downhole electrical submersible pumps to rod
pumps (“CTRs”), thereby reducing costly workovers and long-term
operating costs; and
-
Provided third quarter guidance and an improved outlook for full
year sales volumes and operating costs, while leaving capital
spending guidance unchanged.
Subsequent Events
On July 5, 2022, the Company announced it had
entered into an agreement to acquire (the “Transaction”) the assets
of privately-held Stronghold Energy II Operating, LLC and
Stronghold Energy II Royalties, LP (collectively, “Stronghold”).
Stronghold’s operations are focused on the development of
approximately 37,000 net acres in the Permian Basin’s CBP, where
Ring also conducts operations. The effective date of the
Transaction is June 1, 2022 and closing is anticipated during the
third quarter. As a result, the impact from the Transaction will
not be included in Ring’s financial and operational results until
following the closing of the transaction.
Management Commentary
Mr. Paul D. McKinney, Chairman of the Board and
Chief Executive Officer, commented, “The continued strong
performance of our drilling and completions program, bolstered by
significantly higher commodity prices, enhanced our second quarter
results and led to record quarterly revenue and Adjusted EBITDA.
Adjusted EBITDA increased 33% from this year’s first quarter and we
have generated nearly as much Adjusted EBITDA in the first half of
2022 as we did in the entire prior year. We also generated Free
Cash Flow for the 11th consecutive quarter, as well as reduced debt
by $10 million. We have now paid down $20 million in debt in 2022
and lowered our leverage ratio to 2.1x, which was almost a full
turn and a half lower than at year-end 2021. We believe our strong
operational and financial results for this quarter clearly reflect
the merits of our value-focused and proven strategy and is a direct
reflection of the hard work of our workforce. I want to thank our
entire team for their dedication and commitment to generating value
for our stockholders.”
Mr. McKinney continued, “During the second
quarter, our development program was focused on our NWS acreage on
which we drilled nine wells, completed and placed on production
seven wells, and initiated the completion of four additional wells.
I am pleased to report that our production results from the wells
brought online in the second quarter have met or exceeded our
expectations, and we will continue to leverage industry-leading
drilling and completion technologies that best exploit the unique
geologic opportunities afforded by our attractive acreage. We
intend to drill seven to nine wells and complete eight to ten wells
during the third quarter and have increased our full year sales
volumes guidance to reflect the enhanced performance of our capital
spending program.”
Mr. McKinney concluded, “In the coming weeks, we
look forward to completing the Stronghold acquisition and providing
additional details regarding our combined outlook. The Transaction
strategically enhances our size and scale, complements our existing
operations, materially grows our long-term inventory of high
rate-of-return projects, and is immediately accretive on all key
metrics. The credit facility will provide new benefits to our
stockholders, including the ability to pay dividends and buy back
stock in the future under certain conditions. The Ring team has
extensive experience operating these types of stacked-pay,
multi-zone assets and consider this opportunity as ‘going home to
our roots’. Through the acquisition, we expect to nearly double
production, reserves and projected Free Cash Flow, lower our
lifting costs, and optimize our future capital spending program.
The result will be an enhanced financial position that accelerates
our ability to pay down debt, which will benefit our stockholders
and allow Ring to more effectively and profitably grow our
business.”
Financial Overview: For the
second quarter of 2022, the Company reported net income of $41.9
million, or $0.32 per diluted share, which included a $12.2 million
before tax non-cash unrealized commodity derivative gain and $1.9
million in before tax share-based compensation. Excluding the
estimated after-tax impact of the adjustments, the Company’s
Adjusted Net Income was $31.3 million, or $0.29 per share. In 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 second quarter of 2021, Ring reported a
net loss of $15.9 million, or $0.16 per diluted share, which
included a $22.8 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 second quarter of 2021 was
$7.3 million, or $0.07 per share.
Adjusted EBITDA grew by 33% to $47.4 million for
the second quarter of 2022 from $35.6 million in the first quarter
of 2022, with the increase primarily driven by higher realized
pricing and sales volumes. Second quarter of 2021 Adjusted EBITDA
was $20.6 million.
Free Cash Flow was $2.5 million for the second
quarter of 2022 versus $12.6 million in the first quarter of 2022
and $5.6 million for the second quarter of 2021. Impacting Free
Cash Flow for the second quarter of 2022 was the timing of capital
spending for the Company’s 2022 drilling program.
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 second quarter of 2022
were 9,341 Boe/d (86% oil), or 850,017 Boe, compared to 8,870 Boe/d
(85% oil), or 798,262 Boe, for the first quarter of 2022, and 8,709
Boe/d (89% oil), or 792,551 Boe, in the second quarter of 2021 – a
5% and 7% increase, respectively, on a Boe/d basis. Second quarter
2022 sales volumes were comprised of 729,484 barrels (“Bbls”) of
oil and 723,196 thousand cubic feet (“Mcf”) of natural gas.
For the second quarter of 2022, the Company
realized an average sales price of $109.24 per barrel of crude oil
(before the impact of hedging) and $7.29 per Mcf for natural gas.
The combined average realized sales price for the period was $99.95
per Boe, up 17% from $85.41 per Boe for the first quarter of 2022,
and 66% higher than $60.26 per Boe in the second quarter of 2021.
The average oil price differential the Company experienced from WTI
NYMEX futures pricing in the second quarter of 2022 was a positive
$0.81 per barrel of crude oil, while the average natural gas price
differential from NYMEX futures pricing was a negative $0.23 per
Mcf.
Revenues were $85.0 million for the second
quarter of 2022 compared to $68.2 million for the first quarter of
2022 and $47.8 million for the second quarter of 2021. Primarily
driving the comparative period increases of 25% and 78%,
respectively, were higher realized oil and natural gas pricing as
well as increased oil sales volumes.
Lease Operating Expense
(“LOE”): LOE, which includes expensed workovers and
facilities maintenance, was $8.3 million, or $9.77 per Boe, in the
second quarter of 2022 versus $9.0 million, or $11.22 per Boe, in
first quarter of 2022 and $7.4 million, or $9.37 per Boe, for the
second quarter of 2021. Primarily contributing to the sequential
decrease in second quarter 2022 LOE was a lower level of workover
expense.
Gathering, Transportation and Processing
(“GTP”) Costs: GTP costs, which are associated with
natural gas sales, were $0.65 per Boe in the second quarter of 2022
versus $1.62 per Boe in the first quarter and $1.13 per Boe in the
second quarter of 2021. Due to a contractual change effective May
1, 2022, the Company no longer maintains ownership and control of
the natural gas through processing. As a result, GTP costs moving
forward will be reflected as a reduction to the natural gas sales
price and not as an expense line item.
Ad Valorem Taxes: Ad valorem
taxes were $1.12 per Boe for the second quarter of 2022 compared to
$1.19 per Boe in the first quarter of 2022 and $0.89 per Boe for
the second quarter of 2021. The year-over-year quarterly increase
was primarily due to higher commodity prices.
Production Taxes: Production
taxes were $4.89 per Boe in the second quarter of 2022 compared to
$4.03 per Boe in the first quarter of 2022 and $2.77 per Boe in
first quarter of 2021. Production taxes remained steady at 4.5% to
5.0% of revenue for all three periods.
Depreciation, Depletion and Amortization
(“DD&A”) and Asset Retirement Obligation Accretion:
DD&A was $12.65 per Boe in the second quarter of 2022 versus
$12.25 per Boe for the first quarter of 2022 and $11.70 per Boe in
the second quarter of 2021. Asset retirement obligation accretion
was $0.22 per Boe in the second quarter of 2022 compared to $0.24
per Boe for the first quarter of 2022 and $0.23 per Boe in the
second quarter of 2021.
Operating Lease Expense:
Operating lease expense was $83,590 for the second and first
quarters of 2022, and $84,790 in the second quarter of 2021.
Operating lease expenses are primarily associated with the
Company’s office leases.
General and Administrative Expenses
(“G&A”): G&A, excluding share-based compensation,
was $3.9 million, or $4.63 per Boe, for the second quarter of 2022
versus $4.0 million, or $5.01 per Boe, for the first quarter of
2022 and $3.4 million, or $4.30 per Boe, in the second quarter of
2021.
Interest Expense: Interest
expense was $3.3 million in the second quarter of 2022 versus $3.4
million for the first quarter of 2022 and $3.7 million for the
second quarter of 2021. Interest expense decreased for both
comparative periods substantially due to a lower average daily
balance of long-term debt.
Derivative (Loss) Gain: In the
second quarter of 2022, Ring recorded a net loss of $7.4 million on
its commodity derivative contracts, including a realized $19.6
million cash commodity derivative loss and an unrealized $12.2
million non-cash commodity derivative gain. This compared to a net
loss of $27.6 million in the first quarter of 2022, including a
realized $14.1 million cash commodity derivative loss and an
unrealized $13.5 million non-cash commodity derivative loss, and a
net loss of $35.3 million in the second quarter of 2021, including
a realized $12.5 million cash commodity derivative loss and an
unrealized $22.8 million non-cash commodity derivative loss.
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 August 4,
2022):
|
|
|
Average |
Weighted Avg. |
Strike |
Deferred |
Put |
Call |
Date Entered Into |
Production Period |
Instrument |
Daily Volumes |
Swap Price |
Price |
Premium |
Price |
Price |
Crude Oil -
WTI |
|
|
(Bbls) |
(per Bbl) |
|
|
|
|
|
|
|
|
|
|
|
|
|
02/01/2022 |
02/01/2022 -
12/31/2022 |
Swaps |
1,000 |
$81.53 |
|
|
|
|
06/28/2022 |
07/01/2022 -
09/30/2022 |
Put
Options |
1,000 |
|
$107.90 |
$6.95 |
|
|
06/28/2022 |
10/01/2022 -
12/31/2022 |
Put
Options |
1,000 |
|
$100.60 |
$11.71 |
|
|
06/28/2022 |
01/01/2023 -
03/31/2023 |
Put
Options |
1,000 |
|
$95.75 |
$13.96 |
|
|
06/28/2022 |
04/01/2023 -
06/30/2023 |
Put
Options |
1,000 |
|
$92.70 |
$15.20 |
|
|
06/28/2022 |
07/01/2023 -
09/30/2023 |
Put
Options |
1,000 |
|
$90.00 |
$16.00 |
|
|
06/28/2022 |
10/01/2023 -
12/31/2023 |
Put
Options |
1,000 |
|
$87.70 |
$16.53 |
|
|
06/29/2022 |
01/01/2023 -
03/31/2023 |
Put
Options |
500 |
|
$95.25 |
$14.25 |
|
|
06/29/2022 |
04/01/2023 -
06/30/2023 |
Put
Options |
500 |
|
$91.85 |
$15.58 |
|
|
06/29/2022 |
07/01/2023 -
09/30/2023 |
Put
Options |
500 |
|
$89.10 |
$16.45 |
|
|
06/29/2022 |
10/01/2023 -
12/31/2023 |
Put
Options |
500 |
|
$86.90 |
$16.93 |
|
|
06/29/2022 |
01/01/2024 -
03/31/2024 |
Put
Options |
500 |
|
$84.70 |
$17.15 |
|
|
06/29/2022 |
04/01/2024 -
06/30/2024 |
Put
Options |
500 |
|
$82.80 |
$17.49 |
|
|
07/01/2022 |
01/01/2023 -
03/31/2023 |
Put
Options |
1,000 |
|
$91.00 |
$13.79 |
|
|
07/01/2022 |
04/01/2023 -
06/30/2023 |
Put
Options |
1,000 |
|
$88.00 |
$15.32 |
|
|
07/08/2022 |
07/01/2022 -
09/30/2022 |
Put
Options |
500 |
|
$100.30 |
$6.69 |
|
|
07/08/2022 |
10/01/2022 -
12/31/2022 |
Put
Options |
500 |
|
$92.60 |
$12.02 |
|
|
07/08/2022 |
01/01/2023 -
03/31/2023 |
Put
Options |
500 |
|
$87.70 |
$14.35 |
|
|
07/25/2022 |
01/01/2024 -
03/31/2024 |
Collars |
1,000 |
|
|
|
$70.00 |
$86.00 |
07/25/2022 |
04/01/2024 -
06/30/2024 |
Collars |
1,000 |
|
|
|
$70.00 |
$83.40 |
07/25/2022 |
07/01/2024 -
09/30/2024 |
Collars |
1,000 |
|
|
|
$70.00 |
$81.20 |
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 $1,472,209 in the
second quarter of 2022, compared to a provision of $78,752 in the
first quarter of 2022 and $190,644 for the second quarter of
2021.
Balance Sheet and Liquidity:
Total liquidity at the end of the second quarter of 2022 was $81.5
million, a 32% increase from December 31, 2021 and up 58% from June
30, 2021. Liquidity at June 30, 2022 consisted of cash and cash
equivalents of $2.2 million and $79.2 million of availability under
Ring’s revolving bank credit facility, which includes a reduction
of $0.8 million for letters of credit. On June 30, 2022, the
Company had $270.0 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
second 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. Ring is
currently in compliance with all applicable covenants under its
revolving credit facility agreement.
In early April 2022, a total of 6.5 million of
the Company’s common warrants were exercised at a price of $0.80
per warrant. Accordingly, second quarter results reflect the
issuance of 6.5 million shares of common stock and the receipt of
$5.2 million of cash. There are currently approximately 23 million
common warrants that remain unexercised.
Capital Expenditures: During
the second quarter of 2022, capital expenditures on an accrual
basis were $41.8 million as the Company drilled nine wells,
completed seven wells, and began the completion process on four
wells – all in the NWS. Two of the wells completed were 1.0-mile
horizontal wells that were drilled in the first quarter with a
working interest of 100%. In addition, the Company drilled and
completed three 1-mile horizontal wells with a working interest of
100% and two 1.5-mile horizontal wells with a working interest of
approximately 98.7%. Ring also drilled and accelerated the
completion process of four 1.0-mile horizontal wells (previously
anticipated for the third quarter) that were placed online in early
July. Two of the wells have a working interest of 100%, one has a
working interest of 87.5%, and the fourth has a working interest of
75%. During the second quarter of 2022, the Company also performed
four CTR projects, including three in the NWS and one in the
CBP.
2022 Capital Investment, Sales Volumes,
and Operating Expense Guidance
For full year 2022, excluding the impact of the
pending Stronghold acquisition, Ring reiterates its previous
standalone 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.
Ring’s full year capital spending outlook includes targeted well
reactivations, workovers, infrastructure upgrades, and continuing
its CTR program. 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;
-
13% for CTRs, recompletions and capital workovers; and
-
5% 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. 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 the success of its targeted
development program and continued focus on operational excellence,
the Company has increased its full year 2022 sales volumes forecast
to 9,300 to 9,700 Boe/d (86% oil), compared with its prior full
year 2022 guidance of 9,000 to 9,600 Boe/d. Ring currently expects
third quarter 2022 sales volumes to range between 9,500 and 9,900
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 third quarter of 2022. Guidance could
be affected by the factors discussed below in the "Safe Harbor
Statement" section.
|
|
Full Year |
Q3 |
|
|
2022 |
2022 |
|
|
|
|
Sales Volumes: |
|
|
|
Total
(Boe/d) |
9,300 -
9,700 |
9,500 -
9,900 |
|
Oil
(Bo/d) |
8,000 -
8,400 |
8,200 -
8,600 |
|
|
|
|
Capital Program: |
|
|
|
Capital
spending(1) (millions) |
$120 -
$140 |
$35 -
$39 |
|
|
|
|
|
Number of
new wells drilled |
25 -
33 |
7 - 9 |
|
Number of
new wells completed and online |
25 -
30 |
8 -
10 |
|
|
|
|
Operating Expenses: |
|
|
|
LOE (per
Boe) |
$10.25 -
$11.25 |
$10.25 -
$11.50 |
|
|
|
|
(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. |
Investor Conference
Participation
The Company will be participating in EnerCom
Denver in Denver, Colorado where Chairman and Chief Executive
Officer Paul McKinney is scheduled to make a presentation on
Monday, August 8, 2022 at 1:55 pm Mountain Time.
Senior management will also host one-on-one
meetings with investors. The presentation will be webcast live and
archived on Ring’s website, www.ringenergy.com, in the “Investors”
section. An updated investor slide deck will be posted in the
“Investors” section of Ring’s website under “Presentations” by
Monday, August 8, 2022.
Conference Call Information
Ring will hold a conference call on Friday,
August 5, 2022 at 11:00 a.m. Eastern Time to discuss its second
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
Second 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 |
|
Six Months
Ended |
|
|
|
June 30, |
|
|
|
March 31, |
|
|
|
June 30, |
|
|
June 30, |
|
|
|
2022 |
|
|
|
2022 |
|
|
|
2021 |
|
|
|
2022 |
|
|
|
2021 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Oil
and Natural Gas Revenues |
|
$ |
84,961,875 |
|
|
$ |
68,181,032 |
|
|
$ |
47,760,102 |
|
|
$ |
153,142,907 |
|
|
$ |
87,262,634 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Costs and Operating Expenses |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Lease
operating expenses |
|
|
8,301,443 |
|
|
|
8,953,165 |
|
|
|
7,424,488 |
|
|
|
17,254,608 |
|
|
|
15,651,063 |
|
Gathering,
transportation and processing costs |
|
|
549,389 |
|
|
|
1,296,858 |
|
|
|
897,166 |
|
|
|
1,846,247 |
|
|
|
1,832,185 |
|
Ad valorem
taxes |
|
|
949,239 |
|
|
|
951,954 |
|
|
|
703,775 |
|
|
|
1,901,193 |
|
|
|
1,441,026 |
|
Oil and
natural gas production taxes |
|
|
4,157,457 |
|
|
|
3,218,362 |
|
|
|
2,198,339 |
|
|
|
7,375,819 |
|
|
|
4,051,101 |
|
Depreciation, depletion and amortization |
|
|
10,749,204 |
|
|
|
9,781,287 |
|
|
|
9,275,126 |
|
|
|
20,530,491 |
|
|
|
17,383,284 |
|
Asset
retirement obligation accretion |
|
|
186,303 |
|
|
|
188,242 |
|
|
|
184,013 |
|
|
|
374,545 |
|
|
|
377,757 |
|
Operating
lease expense |
|
|
83,590 |
|
|
|
83,590 |
|
|
|
84,790 |
|
|
|
167,180 |
|
|
|
356,307 |
|
General and
administrative expense (including share-based compensation) |
|
|
5,832,302 |
|
|
|
5,522,277 |
|
|
|
3,757,152 |
|
|
|
11,354,579 |
|
|
|
6,670,143 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Costs and Operating Expenses |
|
|
30,808,927 |
|
|
|
29,995,735 |
|
|
|
24,524,849 |
|
|
|
60,804,662 |
|
|
|
47,762,866 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from Operations |
|
|
54,152,948 |
|
|
|
38,185,297 |
|
|
|
23,235,253 |
|
|
|
92,338,245 |
|
|
|
39,499,768 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other Income (Expense) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest
income |
|
|
- |
|
|
|
- |
|
|
|
1 |
|
|
|
- |
|
|
|
1 |
|
Interest
expense |
|
|
(3,279,299 |
) |
|
|
(3,398,361 |
) |
|
|
(3,654,529 |
) |
|
|
(6,677,660 |
) |
|
|
(7,396,498 |
) |
Loss on
derivative contracts |
|
|
(7,457,018 |
) |
|
|
(27,596,141 |
) |
|
|
(35,277,240 |
) |
|
|
(35,053,159 |
) |
|
|
(66,865,879 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
Other Expense |
|
|
(10,736,317 |
) |
|
|
(30,994,502 |
) |
|
|
(38,931,768 |
) |
|
|
(41,730,819 |
) |
|
|
(74,262,376 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (Loss) Before Provision for Income
Taxes |
|
43,416,631 |
|
|
|
7,190,795 |
|
|
|
(15,696,515 |
) |
|
|
50,607,426 |
|
|
|
(34,762,608 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Provision For) Benefit From Income Taxes |
|
|
(1,472,209 |
) |
|
|
(78,752 |
) |
|
|
(190,644 |
) |
|
|
(1,550,961 |
) |
|
|
(190,644 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
Income (Loss) |
|
$ |
41,944,422 |
|
|
$ |
7,112,043 |
|
|
$ |
(15,887,159 |
) |
|
$ |
49,056,465 |
|
|
$ |
(34,953,252 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic Earnings (Loss) per Share |
|
$ |
0.39 |
|
|
$ |
0.07 |
|
|
$ |
(0.16 |
) |
|
$ |
0.47 |
|
|
$ |
(0.35 |
) |
Diluted Earnings (Loss) per Share |
|
$ |
0.32 |
|
|
$ |
0.06 |
|
|
$ |
(0.16 |
) |
|
$ |
0.39 |
|
|
$ |
(0.35 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
Weighted-Average Shares Outstanding |
|
|
106,390,776 |
|
|
|
100,192,562 |
|
|
|
99,300,458 |
|
|
|
103,291,669 |
|
|
|
99,197,160 |
|
Diluted
Weighted-Average Shares Outstanding |
|
|
130,597,589 |
|
|
|
124,004,178 |
|
|
|
99,300,458 |
|
|
|
126,251,705 |
|
|
|
99,197,160 |
|
RING ENERGY,
INC. |
Condensed
Operating Data |
(Unaudited) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended |
|
Six Months
Ended |
|
|
|
June 30, |
|
|
|
March 31, |
|
|
|
June 30, |
|
|
June 30, |
|
|
|
2022 |
|
|
|
2022 |
|
|
|
2021 |
|
|
|
2022 |
|
|
|
2021 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net sales volumes: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Oil
(Bbls) |
|
|
729,484 |
|
|
|
676,215 |
|
|
|
702,408 |
|
|
|
1,405,699 |
|
|
|
1,312,529 (2) |
Natural gas
(Mcf) |
|
|
723,196 |
|
|
|
732,283 |
|
|
|
540,857 |
|
|
|
1,455,479 |
|
|
|
1,178,666 |
|
Total oil
and natural gas (Boe) (1) |
|
|
850,017 |
|
|
|
798,262 |
|
|
|
792,551 |
|
|
|
1,648,279 |
|
|
|
1,508,973 |
|
% Oil
|
|
|
86 |
% |
|
|
85 |
% |
|
|
89 |
% |
|
|
85 |
% |
|
|
87 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average
daily equivalent sales (Boe/d) |
|
|
9,341 |
|
|
|
8,870 |
|
|
|
8,709 |
|
|
|
9,107 |
|
|
|
8,337 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average realized sales prices: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Oil
($/Bbl) |
|
$ |
109.24 |
|
|
$ |
93.80 |
|
|
$ |
65.00 |
|
|
$ |
101.81 |
|
|
$ |
61.74 |
|
Natural gas
($/Mcf) |
|
|
7.29 |
|
|
|
6.49 |
|
|
|
3.90 |
|
|
|
6.89 |
|
|
|
5.28 |
|
Barrel of
oil equivalent ($/Boe) |
|
$ |
99.95 |
|
|
$ |
85.41 |
|
|
$ |
60.26 |
|
|
$ |
92.91 |
|
|
$ |
57.83 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average costs and expenses per Boe ($/Boe): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Lease
operating expenses |
|
$ |
9.77 |
|
|
$ |
11.22 |
|
|
$ |
9.37 |
|
|
$ |
10.47 |
|
|
$ |
10.37 |
|
Gathering,
transportation and processing costs |
|
|
0.65 |
|
|
|
1.62 |
|
|
|
1.13 |
|
|
|
1.12 |
|
|
|
1.21 |
|
Ad valorem
taxes |
|
|
1.12 |
|
|
|
1.19 |
|
|
|
0.89 |
|
|
|
1.15 |
|
|
|
0.95 |
|
Oil and
natural gas production taxes |
|
|
4.89 |
|
|
|
4.03 |
|
|
|
2.77 |
|
|
|
4.47 |
|
|
|
2.68 |
|
Depreciation, depletion and amortization |
|
|
12.65 |
|
|
|
12.25 |
|
|
|
11.70 |
|
|
|
12.46 |
|
|
|
11.52 |
|
Asset
retirement obligation accretion |
|
|
0.22 |
|
|
|
0.24 |
|
|
|
0.23 |
|
|
|
0.23 |
|
|
|
0.25 |
|
Operating
lease expense |
|
|
0.10 |
|
|
|
0.10 |
|
|
|
0.11 |
|
|
|
0.10 |
|
|
|
0.24 |
|
General and
administrative expense (including share-based compensation) |
|
|
6.86 |
|
|
|
6.92 |
|
|
|
4.74 |
|
|
|
6.89 |
|
|
|
4.42 |
|
General and
administrative expense (excluding share-based compensation) |
|
|
4.63 |
|
|
|
5.01 |
|
|
|
4.30 |
|
|
|
4.81 |
|
|
|
3.95 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(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) Includes
379 barrels of skim oil. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
RING ENERGY,
INC. |
Balance
Sheets |
|
|
(Unaudited) |
|
|
|
|
|
June
30, |
|
December
31, |
|
|
2022 |
|
2021 |
|
|
|
|
|
|
|
ASSETS |
|
|
|
|
|
|
Current Assets |
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
2,223,289 |
|
|
$ |
2,408,316 |
|
Accounts
receivable |
|
|
39,496,928 |
|
|
|
24,026,807 |
|
Joint
interest billing receivable |
|
|
1,350,134 |
|
|
|
2,433,811 |
|
Derivative
assets |
|
|
1,353,196 |
|
|
|
- |
|
Prepaid
expenses and other assets |
|
|
3,205,746 |
|
|
|
938,029 |
|
Total Current Assets |
|
|
47,629,293 |
|
|
|
29,806,963 |
|
|
|
|
|
|
|
|
Properties and Equipment |
|
|
|
|
|
|
Oil and
natural gas properties subject to amortization |
|
|
945,521,085 |
|
|
|
883,844,745 |
|
Financing
lease asset subject to depreciation |
|
|
2,067,375 |
|
|
|
1,422,487 |
|
Fixed assets
subject to depreciation |
|
|
2,044,709 |
|
|
|
2,089,722 |
|
Total Properties and Equipment |
|
|
949,633,169 |
|
|
|
887,356,954 |
|
Accumulated
depreciation, depletion and amortization |
|
|
(255,274,309 |
) |
|
|
(235,997,307 |
) |
Net
Properties and Equipment |
|
|
694,358,860 |
|
|
|
651,359,647 |
|
|
|
|
|
|
|
|
Operating lease asset |
|
|
1,140,886 |
|
|
|
1,277,253 |
|
Derivative assets |
|
|
785,389 |
|
|
|
- |
|
Deferred financing costs |
|
|
1,324,918 |
|
|
|
1,713,466 |
|
|
|
|
|
|
|
|
TOTAL ASSETS |
|
$ |
745,239,346 |
|
|
$ |
684,157,329 |
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS' EQUITY |
|
|
|
|
|
|
Current Liabilities |
|
|
|
|
|
|
Accounts
payable |
|
$ |
64,262,609 |
|
|
$ |
46,233,452 |
|
Financing
lease liability |
|
|
407,031 |
|
|
|
316,514 |
|
Operating
lease liability |
|
|
301,339 |
|
|
|
290,766 |
|
Derivative
liabilities |
|
|
32,700,566 |
|
|
|
29,241,588 |
|
Notes
payable |
|
|
894,295 |
|
|
|
586,410 |
|
Total Current Liabilities |
|
|
98,565,840 |
|
|
|
76,668,730 |
|
|
|
|
|
|
|
|
Non-Current Liabilities |
|
|
|
|
|
|
Deferred
income taxes |
|
|
1,641,253 |
|
|
|
90,292 |
|
Revolving
line of credit |
|
|
270,000,000 |
|
|
|
290,000,000 |
|
Financing
lease liability, less current portion |
|
|
667,456 |
|
|
|
343,727 |
|
Operating
lease liability, less current portion |
|
|
983,995 |
|
|
|
1,138,319 |
|
Asset
retirement obligations |
|
|
15,373,543 |
|
|
|
15,292,054 |
|
Total Non-Current Liabilities |
|
|
288,666,247 |
|
|
|
306,864,392 |
|
|
|
|
|
|
|
|
Total Liabilities |
|
|
387,232,087 |
|
|
|
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; 107,236,111
shares and 100,192,562 shares issued and outstanding,
respectively |
|
|
107,236 |
|
|
|
100,193 |
|
Additional
paid-in capital |
|
|
561,791,836 |
|
|
|
553,472,292 |
|
Accumulated
deficit |
|
|
(203,891,813 |
) |
|
|
(252,948,278 |
) |
Total Stockholders' Equity |
|
|
358,007,259 |
|
|
|
300,624,207 |
|
|
|
|
|
|
|
|
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY |
|
$ |
745,239,346 |
|
|
$ |
684,157,329 |
|
|
|
|
|
|
|
|
RING ENERGY,
INC. |
Statements
of Cash Flows |
(Unaudited) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended |
|
|
Six Months
Ended |
|
|
|
|
June 30, |
|
|
|
March 31, |
|
|
|
June 30, |
|
|
|
June 30, |
|
|
|
|
2022 |
|
|
|
2022 |
|
|
|
2021 |
|
|
|
2022 |
|
|
|
2021 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash Flows From Operating Activities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
(loss) |
|
$ |
41,944,422 |
|
|
$ |
7,112,043 |
|
|
$ |
(15,887,159 |
) |
|
$ |
49,056,465 |
|
|
$ |
(34,953,252 |
) |
|
Adjustments
to reconcile net income (loss) to net cash provided by operating
activities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation, depletion and amortization |
|
|
10,749,203 |
|
|
|
9,781,287 |
|
|
|
9,275,126 |
|
|
|
20,530,490 |
|
|
|
17,383,284 |
|
|
Asset retirement obligation accretion |
|
|
186,303 |
|
|
|
188,242 |
|
|
|
184,013 |
|
|
|
374,545 |
|
|
|
377,757 |
|
|
Amortization of deferred financing costs |
|
|
189,274 |
|
|
|
199,274 |
|
|
|
147,224 |
|
|
|
388,548 |
|
|
|
330,251 |
|
|
Share-based compensation |
|
|
1,899,245 |
|
|
|
1,521,910 |
|
|
|
351,775 |
|
|
|
3,421,155 |
|
|
|
707,269 |
|
|
Deferred income tax (benefit) expense |
|
|
1,485,022 |
|
|
|
65,939 |
|
|
|
47,967 |
|
|
|
1,550,961 |
|
|
|
(1,744,175 |
) |
|
Excess tax (benefit) expense related to share-based
compensation |
|
|
- |
|
|
|
- |
|
|
|
142,677 |
|
|
|
- |
|
|
|
1,934,819 |
|
|
Loss on derivative contracts |
|
|
7,457,018 |
|
|
|
27,596,141 |
|
|
|
35,277,240 |
|
|
|
35,053,159 |
|
|
|
66,865,879 |
|
|
Cash paid for derivative settlements, net |
|
|
(19,617,265 |
) |
|
|
(14,115,501 |
) |
|
|
(12,436,333 |
) |
|
|
(33,732,766 |
) |
|
|
(18,357,124 |
) |
|
Changes in
assets and liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounts receivable |
|
|
(4,315,730 |
) |
|
|
(10,078,098 |
) |
|
|
(704,568 |
) |
|
|
(14,393,828 |
) |
|
|
(6,673,307 |
) |
|
Prepaid expenses and other assets |
|
|
(2,470,602 |
) |
|
|
202,885 |
|
|
|
(1,346,762 |
) |
|
|
(2,267,717 |
) |
|
|
(1,181,562 |
) |
|
Accounts payable |
|
|
4,328,968 |
|
|
|
2,519,011 |
|
|
|
2,365,612 |
|
|
|
6,847,979 |
|
|
|
8,659,118 |
|
|
Settlement of asset retirement obligation |
|
|
(1,113,208 |
) |
|
|
(553,368 |
) |
|
|
(1,093,816 |
) |
|
|
(1,666,576 |
) |
|
|
(1,338,277 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
Cash Provided by Operating Activities |
|
|
40,722,650 |
|
|
|
24,439,765 |
|
|
|
16,322,996 |
|
|
|
65,162,415 |
|
|
|
32,010,680 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash Flows From Investing Activities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Payments to
purchase oil and natural gas properties |
|
|
(383,003 |
) |
|
|
(360,848 |
) |
|
|
(178,718 |
) |
|
|
(743,851 |
) |
|
|
(437,688 |
) |
|
Payments to
develop oil and natural gas properties |
|
|
(35,793,923 |
) |
|
|
(13,860,249 |
) |
|
|
(10,824,079 |
) |
|
|
(49,654,172 |
) |
|
|
(22,723,018 |
) |
|
Purchase of
fixed assets subject to depreciation |
|
|
(81,646 |
) |
|
|
(10,114 |
) |
|
|
(41,442 |
) |
|
|
(91,760 |
) |
|
|
(60,903 |
) |
|
Sale of
fixed assets subject to depreciation |
|
|
126,100 |
|
|
|
8,500 |
|
|
|
- |
|
|
|
134,600 |
|
|
|
- |
|
|
Proceeds
from divestiture of oil and natural gas properties |
|
|
25,066 |
|
|
|
- |
|
|
|
- |
|
|
|
25,066 |
|
|
|
2,000,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
Cash Used in Investing Activities |
|
|
(36,107,406 |
) |
|
|
(14,222,711 |
) |
|
|
(11,044,239 |
) |
|
|
(50,330,117 |
) |
|
|
(21,221,609 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash Flows From Financing Activities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Proceeds
from revolving line of credit |
|
|
40,500,000 |
|
|
|
10,000,000 |
|
|
|
6,900,000 |
|
|
|
50,500,000 |
|
|
|
19,900,000 |
|
|
Payments on
revolving line of credit |
|
|
(50,500,000 |
) |
|
|
(20,000,000 |
) |
|
|
(11,900,000 |
) |
|
|
(70,500,000 |
) |
|
|
(32,400,000 |
) |
|
Proceeds
from issuance of common stock and warrants |
|
|
5,163,126 |
|
|
|
- |
|
|
|
80,000 |
|
|
|
5,163,126 |
|
|
|
241,269 |
|
|
Payments to
cover tax withholdings |
|
|
(257,694 |
) |
|
|
- |
|
|
|
- |
|
|
|
(257,694 |
) |
|
|
- |
|
|
Proceeds
from notes payable |
|
|
928,626 |
|
|
|
- |
|
|
|
909,467 |
|
|
|
928,626 |
|
|
|
909,467 |
|
|
Payments on
notes payable |
|
|
(253,360 |
) |
|
|
(367,381 |
) |
|
|
(151,317 |
) |
|
|
(620,741 |
) |
|
|
(151,317 |
) |
|
Payment of
deferred financing costs |
|
|
- |
|
|
|
- |
|
|
|
(76,887 |
) |
|
|
- |
|
|
|
(76,887 |
) |
|
Reduction of
financing lease liabilities |
|
|
(111,864 |
) |
|
|
(118,778 |
) |
|
|
(70,288 |
) |
|
|
(230,642 |
) |
|
|
(119,995 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
Cash Used in Investing Activities |
|
|
(4,531,166 |
) |
|
|
(10,486,159 |
) |
|
|
(4,309,025 |
) |
|
|
(15,017,325 |
) |
|
|
(11,697,463 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net (Decrease) Increase in Cash |
|
|
84,078 |
|
|
|
(269,105 |
) |
|
|
969,732 |
|
|
|
(185,027 |
) |
|
|
(908,392 |
) |
Cash at Beginning of Period |
|
|
2,139,211 |
|
|
|
2,408,316 |
|
|
|
1,700,510 |
|
|
|
2,408,316 |
|
|
|
3,578,634 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash at End of Period |
|
$ |
2,223,289 |
|
|
$ |
2,139,211 |
|
|
$ |
2,670,242 |
|
|
$ |
2,223,289 |
|
|
$ |
2,670,242 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
RING ENERGY,
INC. |
Financial
Commodity Derivative Positions |
As of August
4, 2022 |
|
|
|
|
|
|
|
|
|
|
|
|
Average |
Weighted
Avg. |
Strike |
Deferred |
Put |
Call |
Date Entered Into |
Production Period |
Instrument |
Daily Volumes |
Swap Price |
Price |
Premium |
Price |
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 |
02/01/2022 -
12/31/2022 |
Swaps |
1,000 |
$81.53 |
|
|
|
|
06/28/2022 |
07/01/2022 -
09/30/2022 |
Put
Options |
1,000 |
|
$107.90 |
$6.95 |
|
|
06/28/2022 |
10/01/2022 -
12/31/2022 |
Put
Options |
1,000 |
|
$100.60 |
$11.71 |
|
|
06/28/2022 |
01/01/2023 -
03/31/2023 |
Put
Options |
1,000 |
|
$95.75 |
$13.96 |
|
|
06/28/2022 |
04/01/2023 -
06/30/2023 |
Put
Options |
1,000 |
|
$92.70 |
$15.20 |
|
|
06/28/2022 |
07/01/2023 -
09/30/2023 |
Put
Options |
1,000 |
|
$90.00 |
$16.00 |
|
|
06/28/2022 |
10/01/2023 -
12/31/2023 |
Put
Options |
1,000 |
|
$87.70 |
$16.53 |
|
|
06/29/2022 |
01/01/2023 -
03/31/2023 |
Put
Options |
500 |
|
$95.25 |
$14.25 |
|
|
06/29/2022 |
04/01/2023 -
06/30/2023 |
Put
Options |
500 |
|
$91.85 |
$15.58 |
|
|
06/29/2022 |
07/01/2023 -
09/30/2023 |
Put
Options |
500 |
|
$89.10 |
$16.45 |
|
|
06/29/2022 |
10/01/2023 -
12/31/2023 |
Put
Options |
500 |
|
$86.90 |
$16.93 |
|
|
06/29/2022 |
01/01/2024 -
03/31/2024 |
Put
Options |
500 |
|
$84.70 |
$17.15 |
|
|
06/29/2022 |
04/01/2024 -
06/30/2024 |
Put
Options |
500 |
|
$82.80 |
$17.49 |
|
|
07/01/2022 |
01/01/2023 -
03/31/2023 |
Put
Options |
1,000 |
|
$91.00 |
$13.79 |
|
|
07/01/2022 |
04/01/2023 -
06/30/2023 |
Put
Options |
1,000 |
|
$88.00 |
$15.32 |
|
|
07/08/2022 |
07/01/2022 -
09/30/2022 |
Put
Options |
500 |
|
$100.30 |
$6.69 |
|
|
07/08/2022 |
10/01/2022 -
12/31/2022 |
Put
Options |
500 |
|
$92.60 |
$12.02 |
|
|
07/08/2022 |
01/01/2023 -
03/31/2023 |
Put
Options |
500 |
|
$87.70 |
$14.35 |
|
|
07/25/2022 |
01/01/2024 -
03/31/2024 |
Collars |
1,000 |
|
|
|
$70.00 |
$86.00 |
07/25/2022 |
04/01/2024 -
06/30/2024 |
Collars |
1,000 |
|
|
|
$70.00 |
$83.40 |
07/25/2022 |
07/01/2024 -
09/30/2024 |
Collars |
1,000 |
|
|
|
$70.00 |
$81.20 |
|
|
|
|
|
|
|
|
|
(1) The notional
quantity per the swap contract entered into May 11, 2021 is for
26,750 barrels of oil per month. The 879 represents the daily
amount on an annual basis. |
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 |
|
|
Six Months
Ended |
|
|
|
June 30, |
|
March 31, |
|
June 30, |
|
|
June 30, |
|
|
|
2022 |
|
2022 |
|
2021 |
|
2022 |
|
|
2021 |
|
|
|
|
(Unaudited for All Periods) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Income (Loss) |
|
$ |
41,944,422 |
|
|
$ |
7,112,043 |
|
|
$ |
(15,887,159 |
) |
|
$ |
49,056,465 |
|
|
$ |
(34,953,252 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Share-based compensation |
|
|
1,899,245 |
|
|
|
1,521,910 |
|
|
|
351,775 |
|
|
|
3,421,155 |
|
|
|
707,269 |
|
|
Unrealized loss (gain) on change in fair value of derivatives |
(12,160,246 |
) |
|
|
13,480,640 |
|
|
|
22,840,907 |
|
|
|
1,320,393 |
|
|
|
48,508,755 |
|
|
Tax impact
of adjusted items |
|
|
(347,939 |
) |
|
|
164,305 |
|
|
|
- |
|
|
|
145,314 |
|
|
|
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted Net Income |
|
$ |
31,335,482 |
|
|
$ |
22,278,898 |
|
|
$ |
7,305,523 |
|
|
$ |
53,943,327 |
|
|
$ |
14,262,772 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic Weighted-Average Shares Outstanding |
|
|
106,390,776 |
|
|
|
100,192,562 |
|
|
|
99,300,458 |
|
|
|
103,291,669 |
|
|
|
99,197,160 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted Net Income per Share |
|
$ |
0.29 |
|
|
$ |
0.22 |
|
|
$ |
0.07 |
|
|
$ |
0.52 |
|
|
$ |
0.14 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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 |
|
|
Six Months
Ended |
|
|
|
June 30, |
|
March 31, |
|
June 30, |
|
|
June 30, |
|
|
|
2022 |
|
2022 |
|
2021 |
|
2022 |
|
2021 |
|
|
|
(Unaudited
for All Periods) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Income (Loss) |
|
$ |
41,944,422 |
|
|
$ |
7,112,043 |
|
|
$ |
(15,887,159 |
) |
|
$ |
49,056,465 |
|
|
$ |
(34,953,252 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest
expense, net |
|
|
3,279,299 |
|
|
|
3,398,361 |
|
|
|
3,654,528 |
|
|
|
6,677,660 |
|
|
|
7,396,497 |
|
|
Unrealized loss (gain) on change in fair value of derivatives |
(12,160,246 |
) |
|
|
13,480,640 |
|
|
|
22,840,907 |
|
|
|
1,320,393 |
|
|
|
48,508,755 |
|
|
Income tax
provision (benefit) |
|
|
1,472,209 |
|
|
|
78,752 |
|
|
|
190,644 |
|
|
|
1,550,961 |
|
|
|
190,644 |
|
|
Depreciation, depletion and amortization |
|
|
10,749,204 |
|
|
|
9,781,287 |
|
|
|
9,275,126 |
|
|
|
20,530,491 |
|
|
|
17,383,284 |
|
|
Asset
retirement obligation accretion |
|
|
186,303 |
|
|
|
188,242 |
|
|
|
184,013 |
|
|
|
374,545 |
|
|
|
377,757 |
|
|
Share-based
compensation |
|
|
1,899,245 |
|
|
|
1,521,910 |
|
|
|
351,775 |
|
|
|
3,421,155 |
|
|
|
707,269 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA |
|
$ |
47,370,436 |
|
|
$ |
35,561,235 |
|
|
$ |
20,609,834 |
|
|
$ |
82,931,670 |
|
|
$ |
39,610,954 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA Margin |
|
|
56 |
% |
|
|
52 |
% |
|
|
43 |
% |
|
|
54 |
% |
|
|
45 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic Weighted-Average Shares Outstanding |
|
|
106,390,776 |
|
|
|
100,192,562 |
|
|
|
99,300,458 |
|
|
|
103,291,669 |
|
|
|
99,197,160 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA per Share |
|
$ |
0.45 |
|
|
$ |
0.35 |
|
|
$ |
0.21 |
|
|
$ |
0.80 |
|
|
$ |
0.40 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended |
|
|
Six Months
Ended |
|
|
|
June 30, |
|
March 31, |
|
June 30, |
|
|
June 30, |
|
|
|
2022 |
|
2022 |
|
2021 |
|
2022 |
|
2021 |
|
|
|
(Unaudited for All Periods) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA |
|
$ |
47,370,436 |
|
|
$ |
35,561,235 |
|
|
$ |
20,609,834 |
|
|
$ |
82,931,670 |
|
|
$ |
39,610,954 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net interest
expense (excluding amortization of deferred financing costs) |
|
|
(3,090,025 |
) |
|
|
(3,199,087 |
) |
|
|
(3,507,304 |
) |
|
|
(6,289,112 |
) |
|
|
(7,066,246 |
) |
|
Capital
expenditures |
|
|
(41,810,442 |
) |
|
|
(19,743,693 |
) |
|
|
(11,456,062 |
) |
|
|
(61,554,135 |
) |
|
|
(25,981,498 |
) |
|
Proceeds from divestiture of oil and natural gas properties |
25,066 |
|
|
|
- |
|
|
|
- |
|
|
|
25,066 |
|
|
|
2,000,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Free Cash Flow |
|
$ |
2,495,035 |
|
|
$ |
12,618,455 |
|
|
$ |
5,646,468 |
|
|
$ |
15,113,489 |
|
|
$ |
8,563,210 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended |
|
|
Six Months
Ended |
|
|
|
June 30, |
|
March 31, |
|
June 30, |
|
|
June 30, |
|
|
|
2022 |
|
2022 |
|
2021 |
|
2022 |
|
2021 |
|
|
|
(Unaudited for All Periods) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Cash Provided by Operating Activities |
|
$ |
40,722,650 |
|
|
$ |
24,439,765 |
|
|
$ |
16,322,996 |
|
|
$ |
65,162,415 |
|
|
$ |
32,010,680 |
|
Changes in operating assets and liabilities |
|
|
3,570,572 |
|
|
|
7,909,570 |
|
|
|
779,534 |
|
|
|
11,480,142 |
|
|
|
534,028 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash Flow from Operations |
|
$ |
44,293,222 |
|
|
$ |
32,349,335 |
|
|
$ |
17,102,530 |
|
|
$ |
76,642,557 |
|
|
$ |
32,544,708 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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.
Ring Energy (AMEX:REI)
Historical Stock Chart
From Jun 2024 to Jul 2024
Ring Energy (AMEX:REI)
Historical Stock Chart
From Jul 2023 to Jul 2024