Ring Energy, Inc. (NYSE American: REI) (“Ring” or the “Company”)
today reported operational and financial results for the third
quarter of 2022. In addition, Ring reiterated its fourth quarter
guidance and preliminary outlook for 2023. Third quarter results
include the impact from the acquisition (the “Stronghold
Transaction”) of the assets of privately held Stronghold Energy II
Operating, LLC and Stronghold Energy II Royalties, LP
(collectively, “Stronghold”) for only the month of September 2022
following the closing of the transaction. Ring further commented
that it applied three-stream revenue reporting with the results
disclosed today.
Third Quarter 2022
Highlights
-
Announced the Stronghold Transaction on July 5, 2022 and closed the
acquisition on August 31, 2022. The combined results were:
-
A material improvement in Ring’s financial position, including
substantially increasing liquidity and significantly decreasing the
Company’s leverage ratio; and
-
A significant increase in the Company’s inventory of high
rate-of-return and capital efficient investment opportunities,
which substantially improves Ring’s cash flow generation and
ability to more quickly pay down debt assuming current oil and gas
prices continue;
-
Recorded the highest quarterly sales revenue in the Company’s
history of $94.4 million, an 11% increase from the second quarter
of 2022;
-
Increased sales volumes to 13,278 barrels of oil equivalent per day
(“Boe/d”) (76% oil, 13% natural gas and 11% natural gas liquids
(“NGLs”)) compared to 9,341 Boe/d for the second quarter of
2022;
-
Reported Net Income growth of 79% to $75.1 million, or $0.49 per
diluted share, from $41.9 million, or $0.32 per diluted share, for
the second quarter of 2022;
-
Adjusted Net Income1 grew by 1% to $32.5 million, or $0.28 per
share from $31.3 million, or $0.29 per share, in the second quarter
of 2022;
-
Increased Adjusted EBITDA1 by 18% to $56.0 million, the highest
level of quarterly Adjusted EBITDA in the Company’s history, from
$47.4 million for the second quarter of 2022;
-
Generated Cash Flow from Operations1 of $48.9 million and Free Cash
Flow1 of $9.7 million, reflecting growth from the second quarter of
2022 of 10% and 290%, respectively;
-
Represents 12th consecutive quarter of Free Cash Flow;
-
Paid down $17.0 million of debt on the Company’s revolving credit
facility during the third quarter since closing of the Stronghold
Transaction;
-
Reduced Leverage Ratio2 to 1.4x compared to 3.5x at year end
2021;
-
Increased liquidity to approximately $165 million – an increase in
excess of 165% and more than $100 million higher than year-end
2021;
-
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 year
to date 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, bringing the
total number of wells placed on production year to date to 20;
-
Performed three recompletions in Q3 2022 on the Stronghold
acquisition acreage;
-
Converted six wells with electrical submersible pumps to rod pumps
(“CTRs”) on horizontal wells, including five in NWS and one on its
CBP acreage in Q3 2022; and
-
Reiterated the Company’s fourth quarter guidance and preliminary
outlook for 2023.
-
Adjusted Net Income, Adjusted EBITDA, Free Cash Flow, and Cash Flow
from Operations 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.”
-
Based on annualized third quarter EBITDA adjusted for the pro-forma
effects of the Transaction from the beginning of the quarter, as
per the Credit Agreement.
Management Commentary
Mr. Paul D. McKinney, Chairman of the Board and
Chief Executive Officer, commented, “The third quarter of 2022
initiated a transformational period for our Company and its
shareholders that better positions Ring for long term success. The
immediately accretive acquisition of Stronghold’s complementary CBP
asset base substantially increases our size and scale, materially
grows our inventory of low cost and high rate-of-return inventory
of projects, significantly enhances the opportunity for Free Cash
Flow generation, and lowers our overall cost structure. The
combined result strengthens our balance sheet and provides the
opportunity to accelerate the reduction of our debt. Our improved
financial position will prove invaluable as we evaluate
opportunities to build on our success and execute on our value
driven strategy to improve the long-term interests of our
shareholders.”
Mr. McKinney continued, “Contributing to our
outstanding results for the third quarter was one month of positive
impact from the recently acquired Stronghold assets, the continued
strong performance of our legacy development program where we
brought online nine horizontal wells, amidst a solid commodity
price backdrop. This combination led to financial outperformance,
including record quarterly revenue and Adjusted EBITDA. We were
also pleased to generate Free Cash Flow for the 12th consecutive
quarter that we used to pay down debt by $17 million since the
closing of the Stronghold Transaction. As a result of the
Transaction and continued strength in our legacy business, the
borrowing base on our credit facility was increased more than 70%
to $600 million. As a result, we ended the quarter with more than
$165 million of liquidity, which was more than $100 million higher
than the end of 2021 and represents an increase of more than
165%.”
Mr. McKinney concluded, “The results of our 2022
development program continues to meet or exceed our expectations.
The increased capital efficiency provided by our materially
expanded inventory of high rate-of-return drilling and recompletion
projects will allow us to optimize our future free cash flow, which
will provide the opportunity to pay down debt faster than we could
have done on a standalone basis. As we look to our development
plans for 2023, as we have done in the past, we have designed our
capital program with flexibility to respond to changes in commodity
prices. The initial goal will be to maintain or slightly grow our
average sales volumes from the levels we anticipate for the fourth
quarter and allocate excess free cash flow to paying down debt in a
$75 to $90 barrel of oil price environment. If prices sustainably
remain above that range, we will capitalize on additional
opportunities that maximize shareholder value. This could include
the acceleration of debt reduction, expanding our development
program to organically grow production, further pursue targeted
acquisitions, or the return of capital to shareholders. Regardless
of what the future may bring, I am pleased with our improved
financial position as well as the enhanced flexibility that we
enjoy. Of course, we would not be where we are today without the
tireless efforts of our incredible workforce, and I want to thank
all of them for their continued hard work and dedication as we
collectively focus on improving long-term shareholder value.”
Financial Overview: For the
third quarter of 2022, the Company reported net income of $75.1
million, or $0.49 per diluted share, which included a $47.7 million
before tax non-cash unrealized commodity derivative gain, $1.5
million in before tax share-based compensation and $1.1 million of
transaction related costs. Excluding the estimated after-tax impact
of the adjustments, the Company’s Adjusted Net Income was $32.5
million, or $0.28 per share. In 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 third quarter of 2021,
Ring reported net income of $14.2 million, or $0.12 per diluted
share, which included a $8.2 million before tax non-cash unrealized
commodity derivative gain, and $0.8 million in before tax
share-based compensation. Excluding the estimated after-tax impact
of these adjustments, Adjusted Net Income in the third quarter of
2021 was $6.7 million, or $0.07 per share.
Adjusted EBITDA grew by 18% to $56.0 million for
the third quarter of 2022 from $47.3 million in the second quarter
of 2022, with the increase primarily driven by higher sales
volumes. Third quarter of 2021 Adjusted EBITDA was $19.7
million.
Free Cash Flow was $9.7 million for the third
quarter of 2022 versus $2.5 million in the second quarter of 2022 –
a 290% increase. Cash Flow from Operations grew by 10% to $48.9
million for the third quarter of 2022 from $44.3 million in the
second quarter of 2022. Cash Flow from Operations for the third
quarter of 2021 was $16.4 million.
Adjusted Net Income, Adjusted EBITDA, Free Cash
Flow, and Cash Flow from Operations 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: As a result of the Stronghold Transaction,
beginning July 1, 2022, the Company began reporting revenues on a
three-stream basis, separately reporting crude oil, natural gas,
and NGLs sales. For periods prior to July 1, 2022, sales and
reserve volumes, prices, and revenues for NGLs were included in
natural gas.
Sales volumes for the third quarter of 2022 were
13,278 Boe/d (76% oil, 13% natural gas and 11% NGLs), or 1,221,616
Boe, compared to 9,341 Boe/d (86% oil and 14% natural gas), or
850,017 Boe, for the second quarter of 2022, and 8,243 Boe/d (87%
oil and 13% natural gas), or 758,387 Boe, in the third quarter of
2021. Third quarter 2022 sales volumes were comprised of 932,770
barrels (“Bbls”) of oil, 952,762 thousand cubic feet (“Mcf”) of
natural gas, and 130,052 Bbls of NGLs.
For the third quarter of 2022, the Company
realized an average sales price (before the impact of hedging) of
$92.64 per barrel of crude oil, $4.89 per Mcf for natural gas and
$25.68 per barrel of NGLs. The combined average realized sales
price for the period was $77.28 per Boe versus $99.95 per Boe for
the second quarter of 2022 and $65.11 per Boe in the third quarter
of 2021. The average oil price differential the Company experienced
from WTI NYMEX futures pricing in the third quarter of 2022 was a
positive $2.28 per barrel of crude oil, while the average natural
gas price differential from NYMEX futures pricing was a negative
$3.15 per Mcf.
Revenues grew by 11% to $94.4 million for the
third quarter of 2022 from $85.0 million in the second quarter of
2022, with the increase associated with higher sales volumes
partially offset by lower realized pricing. Third quarter of 2022
revenues increased 91% from $49.4 million in the third quarter of
2021. The increase was driven by higher sales volumes and increased
realized oil pricing.
Lease Operating Expense
(“LOE”): LOE, which includes expensed workovers and
facilities maintenance, was $13.0 million, or $10.67 per Boe, in
the third quarter of 2022 versus $8.3 million, or $9.77 per Boe, in
second quarter of 2022 and $7.0 million, or $9.21 per Boe, for the
third quarter of 2021. Primarily contributing to the sequential
increase in third quarter 2022 LOE on an absolute and per Boe basis
was higher labor costs and industry wide inflationary pressures, as
well as the Stronghold Transaction, with associated costs beginning
on September 1, 2022.
Gathering, Transportation and Processing
(“GTP”) Costs: As previously disclosed, due to a
contractual change effective May 1, 2022, the Company no longer
maintains ownership and control of natural gas through processing.
As a result, GTP costs are now reflected as a reduction to the
natural gas sales price and not as an expense line item.
Ad Valorem Taxes: Ad valorem
taxes were $0.98 per Boe for the third quarter of 2022 compared to
$1.12 per Boe in the second quarter of 2022 and $0.93 per Boe for
the third quarter of 2021.
Production Taxes: Production
taxes were $3.74 per Boe in the third quarter of 2022 compared to
$4.89 per Boe in the second quarter of 2022 and $2.95 per Boe in
third quarter of 2021. Production taxes remained steady at 4.5% to
4.9% of revenue for all three periods.
Depreciation, Depletion and Amortization
(“DD&A”) and Asset Retirement Obligation Accretion:
DD&A was $11.73 per Boe in the third quarter of 2022 versus
$12.65 per Boe for the second quarter of 2022 and $12.28 per Boe in
the third quarter of 2021. Asset retirement obligation accretion
was $0.20 per Boe in the third quarter of 2022 compared to $0.22
per Boe in the second quarter of 2022 and $0.24 per Boe in the
third quarter of 2021.
Operating Lease Expense:
Operating lease expense was $83,590 for the third and second
quarters of 2022, and $83,589 in the third quarter of 2021.
Operating lease expenses are primarily associated with the
Company’s office leases.
General and Administrative Expenses
(“G&A”): G&A, excluding non-cash share-based
compensation, was $5.9 million, or $4.79 per Boe, in the third
quarter of 2022 versus $3.9 million, or $4.63 per Boe, in the
second quarter of 2022 and $3.7 million, or $4.82 per Boe, in the
third quarter of 2021. The third quarter of 2022 included $1.1
million of transaction related costs for the Stronghold
acquisition. Adjusted for transaction related costs, G&A,
excluding non share-based compensation, for the third quarter of
2022 was $4.7 million, or $3.85 per Boe.
Interest Expense: Interest
expense was $7.0 million in the third quarter of 2022 versus $3.3
million for the second quarter of 2022 and $3.6 million for the
third quarter of 2021. Interest expense increased for both
comparative periods substantially due to a higher average daily
balance of long-term debt associated with additional borrowings on
the Company’s revolving credit facility associated with the closing
of the Stronghold Transaction on August 31, 2022.
Derivative (Loss) Gain: In the
third quarter of 2022, Ring recorded a net gain of $32.9 million on
its commodity derivative contracts, including a realized $14.8
million cash commodity derivative loss and an unrealized $47.7
million non-cash commodity derivative gain. This compared to a net
loss of $7.4 million in the second quarter of 2022, including a
realized $19.6 million cash commodity derivative loss and an
unrealized $12.2 million non-cash commodity derivative gain, and a
net loss of $6.7 million in the third quarter of 2021, including a
realized $14.9 million cash commodity derivative loss and an
unrealized $8.2 million non-cash commodity derivative gain.
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 $4.3 million in the
third quarter of 2022, compared to a provision of $1.5 million in
the second quarter of 2022 and a benefit of $48,701 for the third
quarter of 2021.
Balance Sheet and Liquidity:
Total liquidity at the end of the third quarter of 2022 was $165.1
million, a 168% increase from December 31, 2021 and up 103% from
June 30, 2022. Liquidity at September 30, 2022 consisted of cash
and cash equivalents of $0.9 million and $164.2 million of
availability under Ring’s revolving bank credit facility, which
includes a reduction of $0.8 million for letters of credit. On
September 30, 2022, the Company had $435.0 million in borrowings
outstanding on its revolving credit facility that has a current
borrowing base of $600.0 million. Ring paid down $17.0 million of
debt under its revolving credit facility since the closing of the
Stronghold Transaction 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.
Also in conjunction with the closing of the
Stronghold Transaction, Ring issued approximately 21.3 million
shares of common stock and 153,176 shares of Convertible Preferred
Stock to the owners of the Stronghold assets. The Convertible
Preferred Stock was converted into approximately 42.5 million
shares of common stock following approval of the conversion by a
stockholder vote on October 27, 2022.
Capital Expenditures: During
the third quarter of 2022, capital expenditures on an accrual basis
were $40.3 million as the Company drilled eight wells, completed
nine wells, performed three recompletions, and converted six
CTRs.
Fourth Quarter 2022 Guidance and
Preliminary Full Year 2023 Outlook
The Company is reiterating its fourth quarter
2022 and preliminary full year 2023 outlook provided on October 13,
2022. More specifically:
Fourth Quarter of 2022
-
Capital expenditures of $42 million to $46 million, which is
approximately 15% lower from the prior estimate of $50 million to
$54 million. The Company’s current spending estimate includes:
-
Completing and placing on production the remaining three wells
drilled in the third quarter of 2022;
-
Drilling and completing eight to nine new wells, including four Hz
wells with two in NWS and two in CBP, and four to five vertical
wells in CBP; and
-
Recompleting eight to 12 wells in CBP.
-
Ring continues to expect fourth quarter sales volumes of 18,000 to
19,000 Boe/d (approximately 70% oil, 17% natural gas and 13%
natural gas liquids (“NGLs”)), despite the reduction in estimated
fourth quarter capital expenditures.
- 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.
Preliminary Outlook for 2023
-
Estimated capital expenditures of $150 million to $175 million that
include a balanced and capital efficient combination of drilling Hz
wells on legacy assets and vertical wells on the recently acquired
CBP assets, as well as performing recompletions and CTRs, with 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.
The Company remains squarely focused on
continuing to generate free cash flow in 2023, after all expenses,
costs and capital expenditures. All 2023 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 primarily as a result of the Stronghold Transaction
is expected to further reduce Ring’s leverage ratio during
2023.
Conference Call Information
Ring will hold a conference call on Thursday,
November 10, 2022 at 11:00 a.m. Eastern Time to discuss its third
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
Third 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 |
|
Nine Months
Ended |
|
|
|
September 30, |
|
June 30, |
|
September 30, |
|
September 30, |
|
|
|
2022 |
|
|
2022 |
|
|
2021 |
|
|
|
2022 |
|
|
2021 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Oil,
Natural Gas, Natural Gas Liquids Revenues |
|
$ |
94,408,948 |
|
$ |
84,961,875 |
|
$ |
49,376,176 |
|
|
$ |
247,551,855 |
|
$ |
136,638,810 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Costs and Operating Expenses |
|
|
|
|
|
|
|
|
|
|
|
|
Lease
operating expenses |
|
|
13,029,098 |
|
|
8,301,443 |
|
|
6,983,196 |
|
|
|
30,283,706 |
|
|
22,634,259 |
|
Gathering,
transportation and processing costs |
|
|
- |
|
|
549,389 |
|
|
1,051,163 |
|
|
|
1,846,247 |
|
|
2,883,348 |
|
Ad valorem
taxes |
|
|
1,199,385 |
|
|
949,239 |
|
|
703,774 |
|
|
|
3,100,578 |
|
|
2,144,800 |
|
Oil and
natural gas production taxes |
|
|
4,563,519 |
|
|
4,157,457 |
|
|
2,240,759 |
|
|
|
11,939,338 |
|
|
6,291,860 |
|
Depreciation, depletion and amortization |
|
|
14,324,502 |
|
|
10,749,204 |
|
|
9,310,524 |
|
|
|
34,854,993 |
|
|
26,693,808 |
|
Asset
retirement obligation accretion |
|
|
243,140 |
|
|
186,303 |
|
|
182,905 |
|
|
|
617,685 |
|
|
560,662 |
|
Operating
lease expense |
|
|
83,590 |
|
|
83,590 |
|
|
83,589 |
|
|
|
250,770 |
|
|
439,896 |
|
General and
administrative expense (including share-based compensation) |
|
|
7,393,848 |
|
|
5,832,302 |
|
|
4,433,251 |
|
|
|
18,748,427 |
|
|
11,103,394 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Costs and Operating Expenses |
|
|
40,837,082 |
|
|
30,808,927 |
|
|
24,989,161 |
|
|
|
101,641,744 |
|
|
72,752,027 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from Operations |
|
|
53,571,866 |
|
|
54,152,948 |
|
|
24,387,015 |
|
|
|
145,910,111 |
|
|
63,886,783 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other Income (Expense) |
|
|
|
|
|
|
|
|
|
|
|
|
Interest
income |
|
|
4 |
|
|
- |
|
|
- |
|
|
|
4 |
|
|
1 |
|
Interest
expense |
|
|
(7,021,385 |
) |
|
(3,279,299 |
) |
|
(3,551,462 |
) |
|
|
(13,699,045 |
) |
|
(10,947,960 |
) |
Loss on
derivative contracts |
|
|
32,851,189 |
|
|
(7,457,018 |
) |
|
(6,720,320 |
) |
|
|
(2,201,970 |
) |
|
(73,586,199 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
Other Expense |
|
|
25,829,808 |
|
|
(10,736,317 |
) |
|
(10,271,782 |
) |
|
|
(15,901,011 |
) |
|
(84,534,158 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (Loss) Before Provision for Income
Taxes |
|
|
79,401,674 |
|
|
43,416,631 |
|
|
14,115,233 |
|
|
|
130,009,100 |
|
|
(20,647,375 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
(Provision For) Benefit From Income Taxes |
|
|
(4,315,783 |
) |
|
(1,472,209 |
) |
|
48,701 |
|
|
|
(5,866,744 |
) |
|
(141,943 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
Income (Loss) |
|
$ |
75,085,891 |
|
$ |
41,944,422 |
|
$ |
14,163,934 |
|
|
$ |
124,142,356 |
|
$ |
(20,789,318 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic Earnings (Loss) per Share |
|
$ |
0.65 |
|
$ |
0.39 |
|
$ |
0.14 |
|
|
$ |
1.16 |
|
$ |
(0.21 |
) |
Diluted Earnings (Loss) per Share |
|
$ |
0.49 |
|
$ |
0.32 |
|
$ |
0.12 |
|
|
$ |
0.92 |
|
$ |
(0.21 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
Weighted-Average Shares Outstanding |
|
|
115,376,280 |
|
|
106,390,776 |
|
|
99,358,504 |
|
|
|
107,349,184 |
|
|
99,251,532 |
|
Diluted
Weighted-Average Shares Outstanding |
|
|
151,754,998 |
|
|
130,597,589 |
|
|
121,220,748 |
|
|
|
134,826,276 |
|
|
99,251,532 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
RING ENERGY,
INC. |
Condensed
Operating Data |
(Unaudited) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended |
|
Nine Months
Ended |
|
|
|
September 30, |
|
|
June 30, |
|
|
September 30, |
|
September 30, |
|
|
|
2022 |
|
|
|
2022 |
|
|
|
2021 |
|
|
|
2022 |
|
|
|
2021 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net sales volumes: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Oil
(Bbls) |
|
|
932,770 |
|
|
|
729,484 |
|
|
|
659,247 |
|
|
|
2,338,469 |
|
|
|
1,971,776 |
|
Natural gas
(Mcf) |
|
|
952,762 |
|
|
|
723,196 |
|
|
|
594,841 |
|
|
|
2,408,241 |
|
|
|
1,773,506 |
|
Natural gas
liquids (Bbls) (1) |
|
|
130,052 |
|
|
|
- |
|
|
|
- |
|
|
|
130,052 |
|
|
|
- |
|
Total oil
and natural gas (Boe) (1)(2) |
|
|
1,221,616 |
|
|
|
850,017 |
|
|
|
758,387 |
|
|
|
2,869,895 |
|
|
|
2,267,360 |
|
% Oil |
|
|
76 |
% |
|
|
86 |
% |
|
|
87 |
% |
|
|
81 |
% |
|
|
87 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average
daily equivalent sales (Boe/d) |
|
|
13,278 |
|
|
|
9,341 |
|
|
|
8,243 |
|
|
|
10,512 |
|
|
|
8,305 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average realized sales prices: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Oil
($/Bbl) |
|
$ |
92.64 |
|
|
$ |
109.24 |
|
|
$ |
69.61 |
|
|
$ |
98.16 |
|
|
$ |
64.37 |
|
Natural gas
($/Mcf) |
|
|
4.89 |
|
|
|
7.29 |
|
|
|
5.86 |
|
|
|
6.10 |
|
|
|
5.48 |
|
Natural gas
liquids ($/Bbls) |
|
|
25.68 |
|
|
|
- |
|
|
|
- |
|
|
|
25.68 |
|
|
|
- |
|
Barrel of
oil equivalent ($/Boe) |
|
$ |
77.28 |
|
|
$ |
99.95 |
|
|
$ |
65.11 |
|
|
$ |
86.26 |
|
|
$ |
60.26 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average costs and expenses per Boe ($/Boe): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Lease
operating expenses |
|
$ |
10.67 |
|
|
$ |
9.77 |
|
|
$ |
9.21 |
|
|
$ |
10.55 |
|
|
$ |
9.98 |
|
Gathering,
transportation and processing costs |
|
|
- |
|
|
|
0.65 |
|
|
|
1.39 |
|
|
|
0.64 |
|
|
|
1.27 |
|
Ad valorem
taxes |
|
|
0.98 |
|
|
|
1.12 |
|
|
|
0.93 |
|
|
|
1.08 |
|
|
|
0.95 |
|
Oil and
natural gas production taxes |
|
|
3.74 |
|
|
|
4.89 |
|
|
|
2.95 |
|
|
|
4.16 |
|
|
|
2.77 |
|
Depreciation, depletion and amortization |
|
|
11.73 |
|
|
|
12.65 |
|
|
|
12.28 |
|
|
|
12.15 |
|
|
|
11.77 |
|
Asset
retirement obligation accretion |
|
|
0.20 |
|
|
|
0.22 |
|
|
|
0.24 |
|
|
|
0.22 |
|
|
|
0.25 |
|
Operating
lease expense |
|
|
0.07 |
|
|
|
0.10 |
|
|
|
0.11 |
|
|
|
0.09 |
|
|
|
0.19 |
|
General and
administrative expense (including share-based compensation) |
|
|
6.05 |
|
|
|
6.86 |
|
|
|
5.85 |
|
|
|
6.53 |
|
|
|
4.90 |
|
General and
administrative expense (excluding share-based compensation) |
|
|
4.79 |
|
|
|
4.63 |
|
|
|
4.82 |
|
|
|
4.80 |
|
|
|
4.24 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) Beginning July 1,
2022, revenues were reported on a three-stream basis, separately
reporting crude oil, natural gas, and natural gas liquids volumes
and sales. For periods prior to July 1, 2022, volumes and sales for
natural gas liquids were presented with natural gas. |
(2) 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, natural gas, and natural gas liquids may differ
significantly. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
RING ENERGY,
INC. |
Balance
Sheets |
|
|
(Unaudited) |
|
|
|
|
|
September
30, |
|
December
31, |
|
|
2022 |
|
|
2021 |
|
|
|
|
|
|
|
|
ASSETS |
|
|
|
|
|
|
Current Assets |
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
890,567 |
|
|
$ |
2,408,316 |
|
Accounts
receivable |
|
|
45,864,400 |
|
|
|
24,026,807 |
|
Joint
interest billing receivable |
|
|
1,897,125 |
|
|
|
2,433,811 |
|
Derivative
assets |
|
|
13,322,013 |
|
|
|
- |
|
Prepaid
expenses and other assets |
|
|
3,246,569 |
|
|
|
938,029 |
|
Total Current Assets |
|
|
65,220,674 |
|
|
|
29,806,963 |
|
|
|
|
|
|
|
|
Properties and Equipment |
|
|
|
|
|
|
Oil and
natural gas properties subject to amortization |
|
|
1,418,931,111 |
|
|
|
883,844,745 |
|
Financing
lease asset subject to depreciation |
|
|
2,067,375 |
|
|
|
1,422,487 |
|
Fixed assets
subject to depreciation |
|
|
2,985,778 |
|
|
|
2,089,722 |
|
Total Properties and Equipment |
|
|
1,423,984,264 |
|
|
|
887,356,954 |
|
Accumulated
depreciation, depletion and amortization |
|
|
(269,541,416 |
) |
|
|
(235,997,307 |
) |
Net
Properties and Equipment |
|
|
1,154,442,848 |
|
|
|
651,359,647 |
|
|
|
|
|
|
|
|
Operating lease asset |
|
|
1,071,482 |
|
|
|
1,277,253 |
|
Derivative assets |
|
|
11,545,982 |
|
|
|
- |
|
Deferred financing costs |
|
|
19,029,907 |
|
|
|
1,713,466 |
|
|
|
|
|
|
|
|
TOTAL ASSETS |
|
$ |
1,251,310,893 |
|
|
$ |
684,157,329 |
|
|
|
|
|
|
|
|
LIABILITIES, MEZZANINE EQUITY AND STOCKHOLDERS'
EQUITY |
|
|
|
|
|
|
Current Liabilities |
|
|
|
|
|
|
Accounts
payable |
|
$ |
86,822,997 |
|
|
$ |
46,233,452 |
|
Income tax
liability |
|
|
36,736 |
|
|
|
- |
|
Financing
lease liability |
|
|
406,890 |
|
|
|
316,514 |
|
Operating
lease liability |
|
|
306,715 |
|
|
|
290,766 |
|
Derivative
liabilities |
|
|
23,767,689 |
|
|
|
29,241,588 |
|
Notes
payable |
|
|
877,631 |
|
|
|
586,410 |
|
Deferred
cash payment |
|
|
14,511,687 |
|
|
|
- |
|
Total Current Liabilities |
|
|
126,730,345 |
|
|
|
76,668,730 |
|
|
|
|
|
|
|
|
Non-Current Liabilities |
|
|
|
|
|
|
Deferred
income taxes |
|
|
5,920,300 |
|
|
|
90,292 |
|
Revolving
line of credit |
|
|
435,000,000 |
|
|
|
290,000,000 |
|
Financing
lease liability, less current portion |
|
|
564,205 |
|
|
|
343,727 |
|
Operating
lease liability, less current portion |
|
|
905,524 |
|
|
|
1,138,319 |
|
Derivative
liabilities |
|
|
8,734,388 |
|
|
|
- |
|
Asset
retirement obligations |
|
|
29,426,737 |
|
|
|
15,292,054 |
|
Total Non-Current Liabilities |
|
|
480,551,154 |
|
|
|
306,864,392 |
|
|
|
|
|
|
|
|
Total Liabilities |
|
|
607,281,499 |
|
|
|
383,533,122 |
|
|
|
|
|
|
|
|
Mezzanine Equity |
|
|
|
|
|
|
Convertible
preferred stock - $0.001 par value; 153,176 shares outstanding |
|
|
137,858,446 |
|
|
|
- |
|
Stockholders' Equity |
|
|
|
|
|
|
Preferred
stock - $0.001 par value; 50,000,000 shares authorized; 153,176
shares issued or outstanding |
|
|
- |
|
|
|
- |
|
Common stock
- $0.001 par value; 225,000,000 shares authorized; 131,586,927
shares and 100,192,562 shares issued and outstanding,
respectively |
|
|
131,587 |
|
|
|
100,193 |
|
Additional
paid-in capital |
|
|
634,845,283 |
|
|
|
553,472,292 |
|
Accumulated
deficit |
|
|
(128,805,922 |
) |
|
|
(252,948,278 |
) |
Total Stockholders' Equity |
|
|
506,170,948 |
|
|
|
300,624,207 |
|
|
|
|
|
|
|
|
TOTAL LIABILITIES, MEZZANINE EQUITY AND STOCKHOLDERS'
EQUITY |
|
$ |
1,251,310,893 |
|
|
$ |
684,157,329 |
|
|
|
|
|
|
|
|
RING ENERGY,
INC. |
Statements
of Cash Flows |
(Unaudited) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended |
|
|
Nine Months
Ended |
|
|
|
|
September 30, |
|
|
June 30, |
|
|
September 30, |
|
|
September 30, |
|
|
|
|
2022 |
|
|
|
2022 |
|
|
|
2021 |
|
|
|
2022 |
|
|
|
2021 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash Flows From Operating Activities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
(loss) |
|
$ |
75,085,891 |
|
|
$ |
41,944,422 |
|
|
$ |
14,163,934 |
|
|
$ |
124,142,356 |
|
|
$ |
(20,789,318 |
) |
|
Adjustments
to reconcile net income (loss) to net cash provided by operating
activities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation, depletion and amortization |
|
|
14,324,503 |
|
|
|
10,749,203 |
|
|
|
9,310,524 |
|
|
|
34,854,993 |
|
|
|
26,693,808 |
|
|
Asset retirement obligation accretion |
|
|
243,140 |
|
|
|
186,303 |
|
|
|
182,905 |
|
|
|
617,685 |
|
|
|
560,662 |
|
|
Amortization of deferred financing costs |
|
|
1,095,073 |
|
|
|
189,274 |
|
|
|
166,282 |
|
|
|
1,483,621 |
|
|
|
496,533 |
|
|
Share-based compensation |
|
|
1,543,033 |
|
|
|
1,899,245 |
|
|
|
777,461 |
|
|
|
4,964,188 |
|
|
|
1,484,730 |
|
|
Deferred income tax (benefit) expense |
|
|
4,279,047 |
|
|
|
1,485,022 |
|
|
|
1,886,118 |
|
|
|
5,830,008 |
|
|
|
141,943 |
|
|
Excess tax (benefit) expense related to share-based
compensation |
|
|
- |
|
|
|
- |
|
|
|
(1,934,819 |
) |
|
|
- |
|
|
|
- |
|
|
(Gain) Loss on derivative contracts |
|
|
(32,851,189 |
) |
|
|
7,457,018 |
|
|
|
6,720,320 |
|
|
|
2,201,970 |
|
|
|
73,586,199 |
|
|
Cash (paid) for derivative settlements, net |
|
|
(14,861,116 |
) |
|
|
(19,617,265 |
) |
|
|
(14,921,008 |
) |
|
|
(48,593,882 |
) |
|
|
(33,278,132 |
) |
|
Changes in
assets and liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounts receivable |
|
|
(6,907,079 |
) |
|
|
(4,315,730 |
) |
|
|
1,656,229 |
|
|
|
(21,300,907 |
) |
|
|
(5,017,078 |
) |
|
Prepaid expenses and other assets |
|
|
(40,823 |
) |
|
|
(2,470,602 |
) |
|
|
278,870 |
|
|
|
(2,308,540 |
) |
|
|
(902,692 |
) |
|
Accounts payable |
|
|
27,144,096 |
|
|
|
4,328,968 |
|
|
|
(329,555 |
) |
|
|
33,992,075 |
|
|
|
8,329,563 |
|
|
Settlement of asset retirement obligation |
|
|
(881,768 |
) |
|
|
(1,113,208 |
) |
|
|
(444,502 |
) |
|
|
(2,548,344 |
) |
|
|
(1,782,779 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
Cash Provided by Operating Activities |
|
|
68,172,808 |
|
|
|
40,722,650 |
|
|
|
17,512,759 |
|
|
|
133,335,223 |
|
|
|
49,523,439 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash Flows From Investing Activities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Payments for
the Stronghold Acquisition |
|
|
(183,359,626 |
) |
|
|
- |
|
|
|
- |
|
|
|
(183,359,626 |
) |
|
|
- |
|
|
Payments to
purchase oil and natural gas properties |
|
|
(467,840 |
) |
|
|
(383,003 |
) |
|
|
(141,468 |
) |
|
|
(1,211,691 |
) |
|
|
(579,156 |
) |
|
Payments to
develop oil and natural gas properties |
|
|
(34,121,878 |
) |
|
|
(35,793,923 |
) |
|
|
(11,957,917 |
) |
|
|
(83,776,050 |
) |
|
|
(34,680,935 |
) |
|
Purchase of
fixed assets subject to depreciation |
|
|
(66,838 |
) |
|
|
(81,646 |
) |
|
|
(548,730 |
) |
|
|
(158,598 |
) |
|
|
(609,633 |
) |
|
Sale of
fixed assets subject to depreciation |
|
|
- |
|
|
|
126,100 |
|
|
|
- |
|
|
|
134,600 |
|
|
|
- |
|
|
Proceeds
from divestiture of oil and natural gas properties |
|
|
- |
|
|
|
25,066 |
|
|
|
- |
|
|
|
25,066 |
|
|
|
2,000,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
Cash Used in Investing Activities |
|
|
(218,016,182 |
) |
|
|
(36,107,406 |
) |
|
|
(12,648,115 |
) |
|
|
(268,346,299 |
) |
|
|
(33,869,724 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash Flows From Financing Activities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Proceeds
from revolving line of credit |
|
|
541,500,000 |
|
|
|
40,500,000 |
|
|
|
14,500,000 |
|
|
|
592,000,000 |
|
|
|
34,400,000 |
|
|
Payments on
revolving line of credit |
|
|
(376,500,000 |
) |
|
|
(50,500,000 |
) |
|
|
(20,000,000 |
) |
|
|
(447,000,000 |
) |
|
|
(52,400,000 |
) |
|
Proceeds
from issuance of common stock and warrants |
|
|
2,400,000 |
|
|
|
5,163,126 |
|
|
|
- |
|
|
|
7,563,126 |
|
|
|
241,269 |
|
|
Payments to
cover tax withholdings |
|
|
(6,790 |
) |
|
|
(257,694 |
) |
|
|
- |
|
|
|
(264,484 |
) |
|
|
- |
|
|
Proceeds
from notes payable |
|
|
316,677 |
|
|
|
928,626 |
|
|
|
323,671 |
|
|
|
1,245,303 |
|
|
|
1,233,138 |
|
|
Payments on
notes payable |
|
|
(333,341 |
) |
|
|
(253,360 |
) |
|
|
(224,670 |
) |
|
|
(954,082 |
) |
|
|
(375,987 |
) |
|
Payment of
deferred financing costs |
|
|
(18,762,502 |
) |
|
|
- |
|
|
|
- |
|
|
|
(18,762,502 |
) |
|
|
(76,887 |
) |
|
Reduction of
financing lease liabilities |
|
|
(103,392 |
) |
|
|
(111,864 |
) |
|
|
(86,941 |
) |
|
|
(334,034 |
) |
|
|
(206,936 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
Cash Used in Financing Activities |
|
|
148,510,652 |
|
|
|
(4,531,166 |
) |
|
|
(5,487,940 |
) |
|
|
133,493,327 |
|
|
|
(17,185,403 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net (Decrease) Increase in Cash |
|
|
(1,332,722 |
) |
|
|
84,078 |
|
|
|
(623,296 |
) |
|
|
(1,517,749 |
) |
|
|
(1,531,688 |
) |
Cash at Beginning of Period |
|
|
2,223,289 |
|
|
|
2,139,211 |
|
|
|
2,670,242 |
|
|
|
2,408,316 |
|
|
|
3,578,634 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash at End of Period |
|
$ |
890,567 |
|
|
$ |
2,223,289 |
|
|
$ |
2,046,946 |
|
|
$ |
890,567 |
|
|
$ |
2,046,946 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
RING ENERGY,
INC.Financial Commodity Derivative
PositionsAs of September 30, 2022
The following table reflects the prices of contracts outstanding
as of September 30, 2022 (Quantities are in barrels for the oil
derivative contracts and in million British thermal units (MMBtu)
for the natural gas derivative contracts.):
|
Oil Hedges
(WTI) |
|
|
2022 |
|
|
2023 |
|
|
2024 |
|
|
|
|
Swaps: |
|
|
|
Hedged
volume (BBL) |
|
379,250 |
|
|
389,250 |
|
|
526,000 |
Weighted
average swap price |
$ |
54.89 |
|
$ |
77.55 |
|
$ |
65.90 |
|
|
|
|
Deferred premium puts: |
|
Hedged
volume (BBL) |
|
138,000 |
|
|
773,500 |
|
|
91,000 |
Weighted
average strike price |
$ |
97.93 |
|
$ |
90.64 |
|
$ |
83.75 |
Weighted
average deferred premium price |
$ |
11.81 |
|
$ |
15.25 |
|
$ |
17.32 |
|
|
|
|
Two-way collars: |
|
|
Hedged
volume (BBL) |
|
97,201 |
|
|
487,622 |
|
|
475,350 |
Weighted
average put price |
$ |
53.93 |
|
$ |
52.16 |
|
$ |
67.88 |
Weighted
average call price |
$ |
67.68 |
|
$ |
62.94 |
|
$ |
83.32 |
|
|
|
|
Three-way collars: |
|
|
Hedged
volume (BBL) |
|
89,985 |
|
|
66,061 |
|
|
- |
Weighted
average first put price |
$ |
40.00 |
|
$ |
45.00 |
|
$ |
- |
Weighted
average second put price |
$ |
50.00 |
|
$ |
55.00 |
|
$ |
- |
Weighted
average call price |
$ |
62.03 |
|
$ |
80.05 |
|
$ |
- |
|
|
|
|
|
|
|
|
|
Gas Hedges
(Henry Hub) |
|
|
2022 |
|
|
2023 |
|
|
2024 |
|
|
|
|
NYMEX Swaps: |
|
|
Hedged
volume (MMBtu) |
|
46,313 |
|
|
175,421 |
|
|
- |
Weighted
average swap price |
$ |
2.51 |
|
$ |
2.40 |
|
$ |
- |
|
|
|
|
Two-way collars: (1) |
|
Hedged
volume (MMBtu) |
|
715,661 |
|
|
2,486,514 |
|
|
1,712,250 |
Weighted
average put price |
$ |
3.76 |
|
$ |
3.18 |
|
$ |
4.00 |
Call hedged
volume (MMBtu) |
|
435,061 |
|
|
2,306,514 |
|
|
1,712,250 |
Weighted
average call price |
$ |
10.22 |
|
$ |
5.03 |
|
$ |
6.29 |
|
|
|
|
Three-way collar: |
|
|
Hedged
volume (MMBtu) |
|
304,250 |
|
|
- |
|
|
- |
Weighted
average first put price |
$ |
2.20 |
|
$ |
- |
|
$ |
- |
Weighted
average second put price |
$ |
2.50 |
|
$ |
- |
|
$ |
- |
Weighted
average call price |
$ |
3.25 |
|
$ |
- |
|
$ |
- |
Weighted
average deferred premium price |
$ |
0.19 |
|
$ |
- |
|
$ |
- |
|
|
|
|
|
|
|
|
|
Gas Hedges
(basis differential) |
|
|
2022 |
|
|
2023 |
|
|
|
2024 |
|
|
|
|
Waha basis swaps: |
|
Hedged
volume (MMBtu) |
|
505,024 |
|
|
1,339,685 |
|
|
|
- |
Weighted
average swap price |
|
(2) |
|
|
(3) |
|
|
$ |
- |
|
|
|
|
(1) The two-way collars for the fourth quarter
of 2022 and first quarter of 2023 include 2x1 collars where the put
volumes of 561,200 and 360,000 are two times the call volumes of
280,600 and 180,000, respectively.(2) The WAHA basis swaps in place
for the remainder of 2022 consist of five derivative contracts,
each with a fixed price of the Henry Hub natural gas price less a
fixed amount (weighted average of $0.57 per MMBtu).(3) The WAHA
basis swaps in place for the calendar year of 2023 consist of two
derivative contracts, each with a fixed price of the Henry Hub
natural gas price less a fixed amount (weighted average of $0.55
per MMBtu).
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 |
|
|
Nine Months
Ended |
|
|
|
September 30, |
June 30, |
|
September 30, |
|
|
September 30, |
|
|
|
2022 |
|
2022 |
|
|
2021 |
|
|
2022 |
|
|
2021 |
|
|
|
|
(Unaudited for All Periods) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Income (Loss) |
|
$ |
|
75,085,891 |
|
|
$ |
|
41,944,422 |
|
|
$ |
14,163,934 |
|
|
$ |
|
124,142,356 |
|
|
$ |
(20,789,318 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Share-based compensation |
|
|
|
1,543,033 |
|
|
|
|
1,899,245 |
|
|
|
777,461 |
|
|
|
|
4,964,188 |
|
|
|
1,484,730 |
|
|
Unrealized
loss (gain) on change in fair value of derivatives |
|
|
|
(47,712,305 |
) |
|
|
|
(12,160,247 |
) |
|
|
(8,200,688 |
) |
|
|
|
(46,391,912 |
) |
|
|
40,308,067 |
|
|
Transaction
costs - Stronghold Acquisition |
|
|
|
1,142,963 |
|
|
|
|
- |
|
|
|
- |
|
|
|
|
1,142,963 |
|
|
|
- |
|
|
Tax impact
of adjusted items |
|
|
|
2,447,351 |
|
|
|
|
(347,939 |
) |
|
|
- |
|
|
|
|
1,817,876 |
|
|
|
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted Net Income |
|
$ |
|
32,506,933 |
|
|
$ |
|
31,335,481 |
|
|
$ |
6,740,707 |
|
|
$ |
|
85,675,471 |
|
|
$ |
21,003,479 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic Weighted-Average Shares Outstanding |
|
|
|
115,376,280 |
|
|
|
|
106,390,776 |
|
|
|
99,358,504 |
|
|
|
|
107,349,184 |
|
|
|
99,251,532 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted Net Income per Share |
|
$ |
|
0.28 |
|
|
$ |
|
0.29 |
|
|
$ |
0.07 |
|
|
$ |
|
0.80 |
|
|
$ |
0.21 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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 |
|
|
Nine Months
Ended |
|
|
September 30, |
|
June 30, |
|
September 30, |
|
|
September 30, |
|
|
2022 |
|
|
2022 |
|
|
2021 |
|
|
2022 |
|
|
2021 |
|
|
|
(Unaudited
for All Periods) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Income (Loss) |
|
$ |
75,085,891 |
|
|
$ |
41,944,422 |
|
|
$ |
14,163,934 |
|
|
$ |
124,142,356 |
|
|
$ |
(20,789,318 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense, net |
|
|
7,021,381 |
|
|
|
3,279,299 |
|
|
|
3,551,462 |
|
|
|
13,699,041 |
|
|
|
10,947,959 |
|
Unrealized loss (gain) on change in fair value of derivatives |
|
|
(47,712,305 |
) |
|
|
(12,160,247 |
) |
|
|
(8,200,688 |
) |
|
|
(46,391,912 |
) |
|
|
40,308,067 |
|
Income tax provision (benefit) |
|
|
4,315,783 |
|
|
|
1,472,209 |
|
|
|
(48,701 |
) |
|
|
5,866,744 |
|
|
|
141,943 |
|
Depreciation, depletion and amortization |
|
|
14,324,502 |
|
|
|
10,749,204 |
|
|
|
9,310,524 |
|
|
|
34,854,993 |
|
|
|
26,693,808 |
|
Asset retirement obligation accretion |
|
|
243,140 |
|
|
|
186,303 |
|
|
|
182,905 |
|
|
|
617,685 |
|
|
|
560,662 |
|
Transaction costs - Stronghold Acquisition |
|
|
1,142,963 |
|
|
|
- |
|
|
|
- |
|
|
|
1,142,963 |
|
|
|
- |
|
Share-based compensation |
|
|
1,543,033 |
|
|
|
1,899,245 |
|
|
|
777,461 |
|
|
|
4,964,188 |
|
|
|
1,484,730 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA |
|
$ |
55,964,388 |
|
|
$ |
47,370,435 |
|
|
$ |
19,736,897 |
|
|
$ |
138,896,058 |
|
|
$ |
59,347,851 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA Margin |
|
|
59 |
% |
|
|
56 |
% |
|
|
40 |
% |
|
|
56 |
% |
|
|
43 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
Weighted-Average Shares Outstanding |
|
|
115,376,280 |
|
|
|
106,390,776 |
|
|
|
99,358,504 |
|
|
|
107,349,184 |
|
|
|
99,251,532 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA per Share |
|
$ |
0.49 |
|
|
$ |
0.45 |
|
|
$ |
0.20 |
|
|
$ |
1.29 |
|
|
$ |
0.60 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended |
|
|
Nine Months
Ended |
|
|
September 30, |
|
June 30, |
|
September 30, |
|
|
September 30, |
|
|
2022 |
|
|
2022 |
|
|
2021 |
|
|
2022 |
|
|
2021 |
|
|
|
(Unaudited for All Periods) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA |
|
$ |
55,964,388 |
|
|
$ |
47,370,435 |
|
|
$ |
19,736,897 |
|
|
$ |
138,896,058 |
|
|
$ |
59,347,851 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net interest expense (excluding amortization of deferred financing
costs) |
|
|
(5,926,308 |
) |
|
|
(3,090,025 |
) |
|
|
(3,385,180 |
) |
|
|
(12,215,420 |
) |
|
|
(10,451,426 |
) |
Capital expenditures (1) |
|
|
(40,295,388 |
) |
|
|
(41,810,442 |
) |
|
|
(13,720,336 |
) |
|
|
(110,245,399 |
) |
|
|
(39,701,834 |
) |
Proceeds from divestiture of oil and natural gas properties |
|
|
- |
|
|
|
25,066 |
|
|
|
- |
|
|
|
25,066 |
|
|
|
2,000,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Free
Cash Flow |
|
$ |
9,742,692 |
|
|
$ |
2,495,034 |
|
|
$ |
2,631,381 |
|
|
$ |
16,460,305 |
|
|
$ |
11,194,591 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) The three and nine
months ended September 30, 2022 excludes the Stronghold
acquisition. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended |
|
|
Nine Months
Ended |
|
|
September 30, |
|
June 30, |
|
September 30, |
|
|
September 30, |
|
|
2022 |
|
|
2022 |
|
|
2021 |
|
|
2022 |
|
|
2021 |
|
|
|
(Unaudited for All Periods) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
Cash Provided by Operating Activities |
|
$ |
68,172,808 |
|
|
$ |
40,722,650 |
|
|
$ |
17,512,759 |
|
|
$ |
133,335,223 |
|
|
$ |
49,523,439 |
|
Changes in
operating assets and liabilities |
|
|
(19,314,426 |
) |
|
|
3,570,572 |
|
|
|
(1,161,042 |
) |
|
|
(7,834,284 |
) |
|
|
(627,014 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash
Flow from Operations |
|
$ |
48,858,382 |
|
|
$ |
44,293,222 |
|
|
$ |
16,351,717 |
|
|
$ |
125,500,939 |
|
|
$ |
48,896,425 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ring Energy (AMEX:REI)
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From Jun 2024 to Jul 2024
Ring Energy (AMEX:REI)
Historical Stock Chart
From Jul 2023 to Jul 2024