Ring Energy Provides Operational Update, Revised Fourth Quarter Guidance & Initial Outlook for 2023
October 13 2022 - 4:45PM
Ring Energy, Inc. (NYSE American: REI) (“Ring” or the “Company”)
today provided an operational update for the third quarter and full
year 2022, revised guidance for the fourth quarter of 2022, and an
initial outlook for the 2023 full year that reflects the previously
announced completion of its acquisition (the “Transaction”) of the
assets of privately held Stronghold Energy II Operating, LLC and
Stronghold Energy II Royalties, LP (collectively, “Stronghold”).
OPERATIONAL HIGHLIGHTS
- Continued the
successful execution of its 2022 development program, including:
- Drilled eight
horizontal (“Hz”) wells during Q3 2022 with five in the Northwest
Shelf (“NWS”) and three in the Central Basin Platform (“CBP”)
bringing the total number of horizontal wells drilled in 2022 to
23;
- Completed and
placed on production nine Hz wells of which four were drilled in Q2
2022 and five were drilled in Q3 2022;
- Performed three
recompletions on the Stronghold acquisition acreage (“CBP South”);
and
- Converted six
wells with electrical submersible pumps to rod pumps (“CTRs”) on
horizontal wells, including five in NWS and one in legacy CBP
acreage (“CBP North”).
REVISED 4Q 2022 GUIDANCE
- Reduced capital
guidance 15% and maintained production guidance:
- Lowered its
estimate of capital expenditures for the fourth quarter of 2022 to
$42 million to $46 million, down about 15% from the prior estimate
of $50 million to $54 million;
- Complete and
place on production the remaining three wells drilled in Q3
2022;
- Drill and
complete eight to nine new wells, including four Hz wells with two
in NWS and two in CBP North, and four to five vertical wells in CBP
South;
- Recomplete eight
to 12 wells in CBP South; and
- Reiterated its
prior fourth quarter sales volumes estimate of 18,000 to 19,000
barrels of oil equivalent per day (“Boepd”) (approximately 70% oil,
17% natural gas and 13% natural gas liquids (“NGLs”)), despite the
reduction in estimated fourth quarter capital expenditures.
2023 OUTLOOK
- Provided a
preliminary outlook for full year 2023, which includes:
- Estimated
capital expenditures of $150 million to $175 million that include:
- Balanced and
capital efficient combination of drilling Hz wells on legacy assets
and vertical wells on the recently acquired CBP South assets;
- Performing
recompletions and CTRs;
- All projects and
estimates based on assumed WTI oil prices of $75 to $90 per barrel
and Henry Hub natural gas prices of $5 to $6 per Mcf; and
- Plans to
maintain or slightly grow 2023 full year average sales volumes
compared to anticipated Q4 2022 sales volumes.
Mr. Paul D. McKinney, Chairman of the Board and
Chief Executive Officer, commented, “In advance of reporting our
full operational and financial performance for the third quarter
next month, we wanted to update our shareholders on our operational
highlights and provide revised fourth quarter 2022 guidance and a
preliminary outlook for 2023.
“During the third quarter, we continued our
highly successful 2022 development program by drilling eight and
completing nine horizontal wells on our legacy acreage and
performing three recompletions on the newly acquired Stronghold
acreage. Combined with our continued focus on promoting operating
efficiencies throughout the business, the results of our program
have met or exceeded expectations.
“As we have discussed in the past, the
acquisition of the Stronghold assets places us in a much stronger
position for continued success through further diversification of
our commodity mix, margin enhancing ownership, and enhanced free
cash flow. Another benefit we have discussed is the increased
capital efficiency of the combined portfolio. As we allocate
capital to our materially expanded inventory of high rate-of-return
drilling and recompletion projects, we have an enhanced opportunity
to optimize our future free cash flow, which will allow us to pay
down debt at a faster rate than we could have done on a standalone
basis. Our improved capital efficiency is reflective in our fourth
quarter guidance in which we decreased our capital spending
expectations from when we announced the acquisition but have
maintained our prior outlook for fourth quarter sales volumes. This
is a direct result of the low cost, high rate of return, and
capital efficient opportunities that were acquired with the
Stronghold assets.
“Because we anticipate commodity price
volatility will continue into 2023, we are designing next year’s
capital program with the flexibility to respond to the marketplace.
And while the recent acquisition improved our balance sheet and
reduced our leverage ratio, we believe our absolute debt levels
justify continued focus on rapidly paying down debt. The initial
goal for 2023 will be to maintain or slightly grow our average
daily sales volumes from the levels we expect to achieve in 4Q 2022
and allocate excess free cash flow to paying down debt in a $75 to
$90 per barrel of oil price environment. If oil prices trend upward
from that range, we will have the flexibility to allocate our cash
flow to the opportunities that maximize shareholder value, whether
it is to accelerate debt repayment, increase capital spending to
organically grow production, continue our pursuit of strategic and
accretive acquisitions, or the return of capital through a stock
buy-back program or dividends. We look forward to discussing this
in more detail as we further develop our plans for next year.”
4Q 2022 GUIDANCE
- In addition to
Company-directed drilling and completion activities, the capital
spending outlook includes funds for targeted well reactivations,
recompletions, 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, contractual
drilling obligations and non-operated drilling, completion and
capital workovers.
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 that 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 successfully drill and
complete oil and/or gas wells on its properties and to integrate
successfully the recent acquired Stronghold assets, continued,
volatile prices for oil and natural gas and significant price
downturns, general economic conditions both domestically and
abroad, 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
A photo accompanying this announcement is available at
https://www.globenewswire.com/NewsRoom/AttachmentNg/f310977f-f956-4b65-a845-35e3aee5a3f8
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