UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM
CURRENT REPORT
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Item 2.02 Results of Operations and Financial Condition
On August 7, 2019, Ring Energy, Inc. (the “Company”) issued a press release announcing its second quarter and three and six month 2019 financial and operational results. The press release is furnished as Exhibit 99.1 to this Current Report on Form 8-K and is incorporated by reference herein.
Item 7.01 Regulation FD Disclosure
The information set forth under Item 2.02 of this Current Report on Form 8-K is hereby incorporated in Item 7.01 by reference.
On July 17, 2019, the Company issued a press release providing information on its operations for the second quarter of 2019. The press release is furnished as Exhibit 99.2 to this Current Report on Form 8-K.
On July 22, 2019, the Company issued a press release providing updated information on its 2019 capital expenditure budget. The press release is furnished as Exhibit 99.3 to this Current Report on Form 8-K.
On August 2, 2019, the Company issued a press release announcing that it has scheduled a conference call on Thursday, August 8, 2019 at 12:00 p.m., Eastern Time, to discuss the Company’s 2019 second quarter financial and operating results. The press release is furnished as Exhibit 99.4 to this Current Report on Form 8-K.
In accordance with General Instruction B.2 of Form 8-K, the information in Item 2.02 and Item 7.01 of this Current Report on Form 8-K, including the attached Exhibits 99.1, 99.2, 99.3 and 99.4, is being furnished pursuant to Item 7.01 and shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section, and shall not be deemed to be incorporated by reference into any of the Company’s filings under the Securities Act of 1933, as amended, or the Exchange Act, whether made before or after the date hereof and regardless of any general incorporation language in such filings, except to the extent expressly set forth by specific reference in such a filing.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits.
|
Exhibit No. |
Title of Document |
| 99.1 | Press Release dated August 7, 2019. |
| 99.2 | Press Release dated July 17, 2019. |
| 99.3 | Press Release dated July 22, 2019. |
| 99.4 | Press Release dated August 2, 2019. |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| Ring Energy, Inc. | ||
| Date: August 7, 2019 | By: | /s/ William R. Broaddrick |
| William R. Broaddrick | ||
| Chief Financial Officer | ||
Exhibit 99.1
FOR IMMEDIATE RELEASE
| August 7, 2019 | NYSE American – REI |
RING ENERGY RELEASES SECOND QUARTER AND SIX MONTH 2019 FINANCIAL AND OPERATIONAL RESULTS
Midland, TX. August 7, 2019 - Ring Energy, Inc. (NYSE American: REI) (“Ring”)(“Company”) announced today financial results for the three months and six months ended June 30, 2019. For the three month period ended June 30, 2019, the Company reported oil and gas revenues of $51,334,225, compared to revenues of $29,924,883 for the quarter ended June 30, 2018. For the six months ended June 30, 2019, the Company reported oil and gas revenues of $93,132,540, compared to $59,816,274 for the six months ended June 30, 2018.
For the three months ended June 30, 2019, Ring reported net income of $12,375,256, or $0.18 per diluted share, compared to net income of $4,719,806, or $0.08 per fully diluted share for the three months ended June 30, 2018. For the six months ended June 30, 2019, the Company reported net income of $23,464,697, or $0.36 per diluted share, compared to net income of $10,385,440, or $0.17 per fully diluted share for the six month period ended June 30, 2018.
For the three months ended June 30, 2019, the net income included a pre-tax unrealized gain on derivatives of $1,530,230 and a non-cash charge for stock-based compensation of $808,734. Excluding these items, the net income per diluted share would have been $0.17. For the six months ended June 30, 2019, the net income included a pre-tax unrealized gain on derivatives of $1,189,545 and a non-cash charge for stock-based compensation of $1,643,199. Excluding these items, the net income per diluted share would have been $0.36. The Company believes results excluding this item are more comparable to estimates provided by security analysts and, therefore, are useful in evaluating operational trends of the Company and its performance, compared to other similarly situated oil and gas producing companies.
For the three months ended June 30, 2019, oil sales volume increased to 893,304 barrels, compared to 469,446 barrels for the same period in 2018, a 90.3% increase, and gas sales volume increased to 569,482 MCF (thousand cubic feet), compared to 319,056 MCF for the same period in 2018, a 78.5% increase. On a barrel of oil equivalent (“BOE”) basis for the three months ended June 30, 2019, production sales were 988,218 BOEs, compared to 522,622 BOEs for the same period in 2018, an 89.1% increase, and 878,609 BOEs for the first quarter of 2019, a 12.4% increase. For the six months ended June 30, 2019, oil sales volume increased to 1,705,868 barrels, compared to 949,310 barrels for the same period in 2018, a 79.7% increase, and gas sales volume increased to 965,746 MCF, compared to 529,087 MCF for the same period in 2018, a 82.5% increase. On a BOE basis for the six months ended June 30, 2019, production sales increased to 1,866,826 BOEs, compared to 1,037,491 BOEs for the same period in 2018, a 79.9% increase.
The average commodity prices received by the Company were $56.86 per barrel of oil and $0.95 per MCF of natural gas for the quarter ended June 30, 2019, compared to $61.70 per barrel of oil and $3.02 per MCF of natural gas for the quarter ended June 30, 2018. On a BOE basis for the three month period ended June 30, 2019, the average price received was $51.94. The average prices received for the six months ended June 30, 2019 were $53.74 per barrel of oil and $1.51 per MCF of natural gas, compared to $61.21 per barrel of oil and $3.24 per MCF of natural gas for the six month period ended June 30, 2018. On a BOE basis for the six month period ended June 30, 2019, the average price received was $49.89.
During March and April 2019, the Company entered into derivative contracts in the form of costless collars of NYMEX WTI Crude Oil prices in order to protect the Company’s cash flow from price fluctuation and maintain its capital programs. “Costless collars” are the combination of two options, a put option (floor) and call option (ceiling) with the options structured so that the premium paid for the put option will be offset by the premium received from selling the call option. The trades were for a total of 5,500 barrels of oil per day for the period of April 2019 through December 2019 and 2,000 barrels of oil per day for the period of January 2020 through December 2020. The average prices for the 5,500 BOPD under contract for 2019 are: Floor = $50.00 / Ceiling = $68.19. The average prices for the 2,000 BOPD under contract for 2020 are: Floor = $50.00 / Ceiling = $65.61. The “Costless Collar” pricing does not take into account any pricing differentials between NYMEX WTI pricing and the price received by the Company.
Lease operating expenses, including production taxes, for the three months ended June 30, 2019 were $14.15 per BOE, an 8.3% decrease from the prior year. Depreciation, depletion and amortization costs, including accretion, decreased 15.6% to $15.02 per BOE. General and administrative costs, which included a $808,734 charge for stock-based compensation, were $4.80 per BOE, a 20% decrease. For the six months ended June 30, 2019, lease operating expenses, including production taxes, were $13.65 per BOE, a 7.3% decrease. Depreciation, depletion and amortization costs, including accretion, were $14.99 per BOE, a 13.4% decrease, and general and administrative costs, which included a $1,643,199 charge for stock-based compensation, were $6.18 per BOE, a 2.8% increase.
Cash provided by operating activities, before changes in working capital, for the three and six months ended June 30, 2019 was $29,031,005, or $0.43 per fully diluted share, and $52,485,173, or $0.80 per fully diluted share, compared to $17,389,257 and $36,557,519, or $0.28 and $0.61 per fully diluted share for the same periods in 2018. Earnings before interest, taxes, depletion and other non-cash items (“Adjusted EBITDA”) for the three and six months ended June 30, 2019 were $33,289,653, or $0.49 per fully diluted share, and $57,504,602, or $0.87 per fully diluted share, compared to $17,306,266 and $36,510,058, or $0.28 and $0.61 in 2018. (See accompanying table for a reconciliation of net income to adjusted EBITDA).
On April 9, 2019 the Company significantly expanded its acreage position and increased its production by completing the acquisition of oil and gas properties from Wishbone Energy Partners LLC, Wishbone Texas Operating Company LLC and WB Waterworks LLC on the Northwest Shelf in Gaines, Yoakum, Runnels and Coke counties, Texas and Lea county, New Mexico. The acquired properties consist of 49,754 gross (38,230 net) acres and include a 77% average working interest and a 58% average net revenue interest. The total adjusted purchase price for the acquisition was approximately $291 million, comprised of approximately $264 million cash and 4,581,001 shares of the Company’s common stock. The cash portion of the transaction was paid from the Company’s senior credit facility which had been increased to $1 billion with a borrowing base of $425 million.
In April 2019, the Company amended and restated its senior credit facility with SunTrust Bank, as lender, issuing bank and administrative agent for several banks and other financial institutions and lenders. The amended and restated senior credit facility increases the maximum facility amount to $1 billion, increases the immediate borrowing base to $425 million and extends the maturity date through April 2024.
As of June 30, 2019, $360.5 million was outstanding on the Company’s $1 billion senior secured credit facility. Total capital expenditures for the six months ended June 30, 2019 were approximately $396.7 million, which included $296.9 million for property acquisitions and $3.4 million of asset retirement obligations. As of June 30, 2019, the weighted average interest rate on borrowings under the senior credit facility was 5.10%.
The Company’s Chief Executive Officer, Mr. Kelly Hoffman, stated, “Our second quarter 2019 was our first working quarter with the inclusion of the Northwest Shelf (“NWS”) acquisition, and we couldn’t be more pleased. We knew this was an outstanding property and after less than 3 months working on the property, we are already seeing very positive results. Our revenues and earnings are exceeding our projections and our need to borrow for operations continues to decline. We attribute this to not only a better average BOE price received in the second quarter, but just as importantly, better overall operational efficiencies. This bodes well for our stated goal of cash flow neutrality by year end 2019. During the quarter we decided to go back to a one-rig drilling program and concentrate the drilling on the NWS acreage while reworking/retooling a large number of existing wells on both the NWS and Central Basin properties. We always have the option of adding a second rig based on improved market conditions. The commodities market continues to be volatile and we felt this was the prudent decision to ensure reaching our goals of continued annual production growth and cash flow neutrality by year end. Our stock price has been a real disappointment for all of us. As we have stated in the past, we are investigating the dramatic increase in our “short” position and hope to have results soon. Fundamentally, this Company is on solid ground. We have built a Company that has excellent assets, experienced management and years of sustainable growth ahead of it.”
About Ring Energy, Inc.
Ring Energy, Inc. is an oil and gas exploration, development and production company with current operations in Texas and New Mexico.
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, 2018, its Form 10Q for the quarter ended June 30, 2019 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.
For further information contact:
Bill Parsons
K M Financial, Inc.
(702) 489-4447
RING ENERGY, INC.
STATEMENTS OF OPERATIONS
| Three Months Ended | Six Months Ended | |||||||||||||||
| June 30, | June 30, | |||||||||||||||
| 2019 | 2018 | 2019 | 2018 | |||||||||||||
| Oil and Gas Revenues | $ | 51,334,225 | $ | 29,924,883 | $ | 93,132,540 | $ | 59,816,274 | ||||||||
| Costs and Operating Expenses | . | |||||||||||||||
| Oil and gas production costs | 11,569,107 | 6,638,313 | 20,977,873 | 12,420,223 | ||||||||||||
| Oil and gas production taxes | 2,412,895 | 1,428,995 | 4,495,770 | 2,854,877 | ||||||||||||
| Depreciation, depletion and amortization | 14,615,270 | 9,144,115 | 27,544,324 | 17,645,494 | ||||||||||||
| Asset retirement obligation accretion | 229,234 | 164,670 | 445,179 | 325,790 | ||||||||||||
| Operating lease expense | 128,175 | - | 256,350 | - | ||||||||||||
| General and administrative expense | 4,743,127 | 3,151,231 | 11,541,144 | 6,237,211 | ||||||||||||
| Total Costs and Operating Expenses | 33,697,808 | 20,527,324 | 65,260,640 | 39,483,595 | ||||||||||||
| Income from Operations | 17,636,417 | 9,397,559 | 27,871,900 | 20,332,679 | ||||||||||||
| Other Income (Expense) | ||||||||||||||||
| Interest income | 1,260 | 82,991 | 13,496 | 91,944 | ||||||||||||
| Interest expense | (4,259,908 | ) | - | (5,032,925 | ) | (44,483 | ) | |||||||||
| Realized loss on derivatives | - | (2,402,426 | ) | - | (3,877,452 | ) | ||||||||||
| Unrealized gain (loss)on change in fair value of derivatives | 1,530,230 | (1,099,273 | ) | 1,189,545 | (1,889,974 | ) | ||||||||||
| Net Other Income (Expense) | (2,728,418 | ) | (3,418,708 | ) | (3,829,884 | ) | (5,719,965 | ) | ||||||||
| Income before Tax Provision | 14,907,999 | 5,978,851 | 24,042,016 | 14,612,714 | ||||||||||||
| Provision for Income Taxes | (2,532,743 | ) | (1,259,045 | ) | (577,319 | ) | (4,227,274 | ) | ||||||||
| Net Income | $ | 12,375,256 | $ | 4,719,806 | $ | 23,464,697 | $ | 10,385,440 | ||||||||
| Basic Earnings Per Common Share | $ | 0.18 | $ | 0.08 | $ | 0.36 | $ | 0.18 | ||||||||
| Diluted Earnings Per Common Share | $ | 0.18 | $ | 0.08 | $ | 0.36 | $ | 0.17 | ||||||||
| Basic Weighted-Average Common Shares Outstanding | 67,357,645 | 60,388,029 | 65,305,081 | 58,412,825 | ||||||||||||
COMPARATIVE OPERATING STATISTICS
| Three Months Ended June 30, | ||||||||||||
| 2019 | 2018 | Change | ||||||||||
| Net Sales - BOE per day | 10,859 | 5,743 | 89 | % | ||||||||
| Per BOE: | ||||||||||||
| Average Sales Price | $ | 51.94 | $ | 57.26 | -9 | % | ||||||
| Lease Operating Expenses | 11.71 | 12.70 | -8 | % | ||||||||
| Production Taxes | 2.44 | 2.73 | -10 | % | ||||||||
| DD&A | 14.79 | 17.50 | -15 | % | ||||||||
| Accretion | 0.23 | 0.32 | -28 | % | ||||||||
| General & Administrative Expenses | 4.80 | 6.03 | -20 | % | ||||||||
| Six Months Ended June 30, | ||||||||||||
| 2019 | 2018 | Change | ||||||||||
| Net Sales - BOE per day | 10,314 | 5,732 | 80 | % | ||||||||
| Per BOE: | ||||||||||||
| Average Sales price | $ | 49.89 | $ | 57.65 | -13 | % | ||||||
| Lease Operating Expenses | 11.24 | 11.97 | -6 | % | ||||||||
| Production Taxes | 2.41 | 2.75 | -12 | % | ||||||||
| DD&A | 14.75 | 17.01 | -13 | % | ||||||||
| Accretion | 0.24 | 0.31 | -22 | % | ||||||||
| General & Administrative Expenses | 6.18 | 6.01 | 3 | % | ||||||||
RING ENERGY, INC.
BALANCE SHEET
| June 30, | December 31, | |||||||
| 2019 | 2018 | |||||||
| ASSETS | ||||||||
| Current Assets | ||||||||
| Cash | $ | 10,578,982 | $ | 3,363,726 | ||||
| Accounts receivable | 21,777,491 | 12,643,478 | ||||||
| Joint interest billing receivable | 1,291,817 | 578,144 | ||||||
| Operating lease asset | 294,095 | - | ||||||
| Derivative asset | 1,189,545 | - | ||||||
| Prepaid expenses and retainers | 3,479,218 | 258,909 | ||||||
| Total Current Assets | 38,611,148 | 16,844,257 | ||||||
| Property and Equipment | ||||||||
| Oil and natural gas properties subject to amortization | 1,037,871,094 | 641,121,398 | ||||||
| Financing lease asset | 637,757 | - | ||||||
| Fixed assets subject to depreciation | 1,465,551 | 1,465,551 | ||||||
| Total Property and Equipment | 1,039,974,402 | 642,586,949 | ||||||
| Accumulated depreciation, depletion and amortization | (128,120,411 | ) | (100,576,087 | ) | ||||
| Net Property and Equipment | 911,853,991 | 542,010,862 | ||||||
| Deferred Income Taxes | 7,209,160 | 7,786,479 | ||||||
| Deferred Financing Costs | 3,592,575 | 424,061 | ||||||
| Total Assets | $ | 961,266,874 | $ | 567,065,659 | ||||
| LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||||
| Current Liabilities | ||||||||
| Accounts payable | $ | 67,258,467 | $ | 51,910,432 | ||||
| Financing lease liability | $ | 204,047 | - | |||||
| Operating lease liability | $ | 294,095 | - | |||||
| Total Current Liabilities | 67,756,609 | 51,910,432 | ||||||
| Revolving line of credit | 360,500,000 | 39,500,000 | ||||||
| Financing lease liability | 409,634 | - | ||||||
| Asset retirement obligations | 16,536,909 | 13,055,797 | ||||||
| Total Liabilities | 445,203,152 | 104,466,229 | ||||||
| Stockholders' Equity | ||||||||
| Preferred stock - $0.001 par value; 50,000,000 shares authorized; no shares issued or outstanding | - | - | ||||||
| Common stock - $0.001 par value; 150,000,000 shares authorized; 67,811,111 shares and 63,229,710 shares issued and outstanding, respectively | 67,811 | 63,230 | ||||||
| Additional paid-in capital | 524,887,107 | 494,892,093 | ||||||
| Accumulated deficit | (8,891,196 | ) | (32,355,893 | ) | ||||
| Total Stockholders' Equity | 516,063,722 | 462,599,430 | ||||||
| Total Liabilities and Stockholders' Equity | $ | 961,266,874 | $ | 567,065,659 | ||||
STATEMENTS OF CASH FLOW
| Six Months Ended | ||||||||
| June 30, | June 30, | |||||||
| 2019 | 2018 | |||||||
| Cash Flows From Operating Activities | ||||||||
| Net income | $ | 23,464,697 | $ | 10,385,440 | ||||
| Adjustments to reconcile net income to net cash provided by (used in) operating activities: | ||||||||
| Depreciation, depletion and amortization | 27,544,324 | 17,645,494 | ||||||
| Accretion expense | 445,179 | 325,790 | ||||||
| Share-based compensation | 1,643,199 | 2,083,547 | ||||||
| Deferred income tax provision | 5,049,219 | 3,068,670 | ||||||
| Excess tax deficiency related to share-based compensation | (4,471,900 | ) | 1,158,604 | |||||
| Change in fair value of derivative instruments | (1,189,545 | ) | 1,889,974 | |||||
| Changes in assets and liabilities: | ||||||||
| Accounts receivable | (9,847,686 | ) | 1,211,719 | |||||
| Prepaid expenses and retainers | (6,388,823 | ) | (638,368 | ) | ||||
| Accounts payable | (451,965 | ) | (3,587,329 | ) | ||||
| Settlement of asset retirement obligation | (384,956 | ) | (265,728 | ) | ||||
| Net Cash Provided by Operating Activities | 35,411,743 | 33,277,813 | ||||||
| Cash Flows From Investing Activities | ||||||||
| Payments to purchase oil and natural gas properties | (268,120,579 | ) | (3,270,000 | ) | ||||
| Payments to develop oil and natural gas properties | (81,051,832 | ) | (113,507,857 | ) | ||||
| Proceeds from disposal of fixed assets subject to depreciation | - | 105,536 | ||||||
| Net Cash Used in Investing Activities | (349,172,411 | ) | (116,672,321 | ) | ||||
| Cash Flows From Financing Activities | ||||||||
| Proceeds from revolving line of credit | 321,000,000 | - | ||||||
| Proceeds from issuance of common stock, net of offering costs | - | 81,819,073 | ||||||
| Reduction of financing lease liability | (24,076 | ) | - | |||||
| Net Cash Provided by Financing Activities | 320,975,924 | 81,819,073 | ||||||
| Net Change in Cash | 7,215,256 | (1,575,435 | ) | |||||
| Cash at Beginning of Period | 3,363,726 | 15,006,581 | ||||||
| Cash at End of Period | $ | 10,578,982 | $ | 13,431,146 | ||||
| Supplemental Cash Flow Information | ||||||||
| Cash paid for interest | $ | 932,896 | $ | 44,483 | ||||
| Noncash Investing and Financing Activities | ||||||||
| Asset retirement obligation incurred during development | $ | 441,244 | $ | 700,218 | ||||
| Operating lease assets obtained in exchange for new operating lease liability | 539,577 | - | ||||||
| Financing lease assets obtained in exchange for new financing lease liability | 637,757 | - | ||||||
| Capitalized expenditures attributable to drilling projects financed through current liabilities | 41,800,000 | 19,000,000 | ||||||
| Acquisition of oil and gas properties | ||||||||
| Assumption of joint interest billing receivable | 1,464,394 | - | ||||||
| Assumption of prepaid assets | 2,864,554 | - | ||||||
| Assumption of accounts and revenue payables | (1,234,862 | ) | - | |||||
| Asset retirement obligation incurred through acquisition | (2,979,645 | ) | - | |||||
| Common stock issued as partial consideration in asset acquisition | (28,356,396 | ) | - | |||||
| Oil and gas properties subject to amortization | 296,910,774 | - | ||||||
| RECONCILIATION OF CASH FLOW FROM OPERATIONS | ||||||||
| Net cash provided by operating activities | $ | 35,411,743 | $ | 33,277,813 | ||||
| Change in operating assets and liabilities | 17,073,430 | 3,279,706 | ||||||
| Cash flow from operations | $ | 52,485,173 | $ | 36,557,519 | ||||
Management believes that the non-GAAP measure of cash flow fromoperations is useful information for investors because it is used internally and is accpeted by the investment community as a means of measuring the Company's ability to fund its capital program. It is also used by professional reseach analysts in providing investment recommendations pertaining to companies in the oil and gas exploration and production industry.
RING ENERGY, INC.
NON-GAAP DISCLOSURE RECONCILIATION
ADJUSTED EBITDA
| Six Months Ended | ||||||||
| June 30, | June 30, | |||||||
| 2019 | 2018 | |||||||
| NET INCOME | $ | 23,464,697 | $ | 10,385,440 | ||||
| Net other (income) expense | 3,829,884 | 5,719,965 | ||||||
| Realized loss on derivatives | - | (3,877,452 | ) | |||||
| Income tax expense | 577,319 | 4,227,274 | ||||||
| Depreciation, depletion and amortization | 27,544,324 | 17,645,494 | ||||||
| Accretion of discounted liabilities | 445,179 | 325,790 | ||||||
| Stock based compensation | 1,643,199 | 2,083,547 | ||||||
| ADJUSTED EBITDA | $ | 57,504,602 | $ | 36,510,058 | ||||
Exhibit 99.2
FOR IMMEDIATE RELEASE
| July 17, 2019 | NYSE American – REI |
RING ENERGY, INC. RELEASES SECOND QUARTER 2019
OPERATIONS UPDATE
Midland, TX. July 17, 2019 - Ring Energy, Inc. (NYSE American: REI) (“Ring”) (“Company”) today released its operations update for the second quarter of 2019. In the three months ended June 30, 2019, the Company drilled thirteen new horizontal San Andres wells. On its Central Basin Platform (“CBP”) asset, Ring drilled seven new horizontal San Andres wells, five 1-mile horizontal wells and two 1½-mile horizontal wells. On its newly acquired Northwest Shelf property (“NWS”), Ring drilled six new horizontal San Andres wells, four 1-mile horizontal wells, two 1½ mile horizontal wells, and were in the process of drilling two more at the end of the quarter. Of the thirteen wells drilled, four were waiting on completion (2 CBP / 2 NWS), seven were drilled, completed and are in varying stages of testing (5 CBP / 2 NWS), and two were drilled (NWS), completed, finished testing and had Initial Potentials (“IPs”) filed. The Bruce E Gentry JR 647 A 2H had an IP of 359 Barrel of Oil Equivalents (“BOE”) per day, or 88 BOE per 1,000 feet, and the Sooner 662 A 2H had an IP of 767 BOE per day, or 181 BOE per 1,000 feet.
Mr. Danny Wilson, Ring’s Executive Vice President and Chief Operating Officer, commented, “We drilled thirteen wells in the second quarter, seven on our Central Basin property and six on our newly acquired Northwest Shelf property. Only two of the wells drilled in the second quarter were IP’d, the remaining eleven are in varying stages of completion and testing. We expected it to take time to replenish the inventory of new wells as there had been no drilling activity on the NWS property since last October. Upon completing the acquisition of the NWS assets from Wishbone Energy Partners, LLC in early April, we began a detailed examination of all existing wells and infrastructure. We have identified a great opportunity, not only in adding new wells, but in dramatically improving the efficiencies and production of existing wells by way of re-works and equipment replacement / upgrading. We will be releasing our amended 2019 CAPEX shortly and will go into more detail. We are very pleased with the preliminary results we are seeing on the NWS property and the continued results we are seeing on our CBP asset. All our forecasts are based on an average Type Curve IP of 86 BOE per 1,000 feet, and the average IP of all of our horizontal wells continues to exceed 100+ BOE per 1,000 feet.
North Gaines Property –
The Ellen B. Peters 3H and 4H continue to perform well. Management stated in the first quarter 2019 operations update (April 22, 2019) that the combined production of the two wells was approximately 200 barrels of oil per day (“BOPD”) with an excellent oil cut (oil to water) percentage of 25%. Currently the combined production of the two wells is approximately 150 BOPD and 150 thousand cubic feet per day (“Mcfpd”) of natural gas.
Delaware Basin Property –
The Hugin 1H and Hugin 2H had IPs filed in the first quarter of 2019. The Hugin 1H had an IP of 818 BOE per day, and the Hugin 2H had an IP of 423 BOE per day. Currently the two wells combined are producing approximately 375 BOPD and 2,300 Mcfd (758 BOEPD). The Phoenix 1H and Phoenix 2H are currently producing approximately 70 BOPD and 2,000 Mcfd (403 BOEPD).
As a result, net production for the second quarter of 2019 was approximately 976,000 BOEs (10,725 BOEPD). This is the first time the quarterly operations update combines the results of both Ring and the newly acquired NWS property. Management provided an estimated proforma in the 2019 first quarter operations update of a combined production for the quarter ended March 31, 2019 of 1,050,000 BOEs. Management attributes the decrease to a normal decline rate since all drilling operations had ceased on the NWS property October 2018 and did not start again until early April 2019. June 2019 average net daily production was approximately 10,800 BOEs.
The average estimated price received per BOE in the second quarter 2019 was $51.00. The current price differential the Company is experiencing from WTI pricing is approximately $5.00.
Mr. Kelly Hoffman, Ring’s Chief Executive Officer, stated, “We continue to see excellent results on our Central Basin property. The initial results we are seeing on our Northwest Shelf property confirms our assessment of the acquisition and the impact it will have going forward. We increased our debt with the recent acquisition and are currently evaluating opportunities to reduce it through the possible monetization of certain assets. Our engineers continue to go over every aspect of the property from potential well locations to existing and future infrastructure improvements. We are evaluating all our properties in order to prioritize needs and maximize returns for every dollar spent. Our goals have never changed as we continue to push towards cash flow neutrality by year end, show a meaningful production increase and overall Company growth.”
About Ring Energy, Inc.
Ring Energy, Inc. is an oil and gas exploration, development and production company with current operations in Texas and New Mexico.
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, 2018, its Form 10Q for the quarter ended March 31, 2019 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.
For further information contact:
Bill Parsons
K M Financial, Inc.
(702) 489-4447
Exhibit 99.3
FOR IMMEDIATE RELEASE
| July 22, 2019 | NYSE American: REI |
RING ENERGY, INC. ANNOUNCES AMENDED 2019
CAPITAL EXPENDITURE BUDGET OF APPROXIMATELY
$152 MILLION
Company Continues To Focus On Cash Flow Neutrality By Year End
Midland, TX. July 22, 2019 – Ring Energy, Inc. (NYSE American: REI) (“Ring”)(“Company”) announced today an amended capital expenditure budget (“CAPEX”) for 2019 of approximately $152 million. The amended CAPEX results in a reduction of approximately $2 million from the preliminary budget of $154 million announced on April 29, 2019. The decrease is the result of a reduction in new horizontal wells to be drilled in 2019 from 50 to 32 and the reallocation of those funds to the upgrading / reworking of a large number of existing wells and necessary improvements to current infrastructure which will improve operational efficiencies. The Company drilled 20 new horizontal wells and four new saltwater disposal wells in the first six months of 2019. The Company employed one drilling rig in the first quarter of 2019, added a second rig with the completion of the Northwest Shelf Property (“NWS”)(“Wishbone”) acquisition in early April, retained two rigs through the remainder of the second quarter, and currently has gone back to one drilling rig. The additional twelve new horizontal wells will all be one-mile horizontals, and all will be drilled on the Company’s newly acquired Northwest Shelf Property. The result for 2019 will be 18 (Sixteen 1-mile horizontals / two 1½-mile horizontals) new horizontal San Andres wells on the Northwest Shelf Property, 13 (ten 1-mile horizontals / three 1½-mile horizontals) new horizontal San Andres wells on the Central Basin Platform Property (“CBP”) and one new 1-mile horizontal Brushy Canyon well on the Delaware Basin Property.
Mr. Danny Wilson, the Company’s Executive Vice President and Chief Operating Officer, commented, “When we completed the Wishbone acquisition in early April and moved a second drilling rig onto property, it was with the intention of maintaining a two-rig drilling program (1 rig on NWS / 1 rig on CBP) for the remainder of 2019. The preliminary results we are seeing on our initial new horizontal wells on the NWS property are exciting and confirms our assessment of what this acquisition means to the Company now and in the future. Once we began our well-by-well examination of the property, it became immediately clear there was an opportunity to increase current production and efficiencies by means of reworks and/or upgrading equipment. This is very similar to what we experienced when we acquired our Delaware Basin asset in 2015 and were able to increase production by upgrading equipment and infrastructure. We had already identified a number of existing wells on our CBP that, through their normal cycle, had become rework or upgrade candidates and, by combining the number of wells on both properties, presented us an opportunity to redeploy funds and; 1) Immediately improve the overall efficiencies and production of approximately 40 existing wells, 2) Upgrade existing infrastructure in preparation for future development, and 3) Reduce our annual budget, and with greater certainty, obtain our primary goals of obtaining cash flow neutrality with modest annual production growth by year-end 2019. We drilled 13 new horizontal wells in the second quarter, eleven of them are in varying stages of completion and testing. This effectively has begun to replenish an inventory of new wells coming on production quarter over quarter. We will maintain one drilling rig and continue to drill new horizontal wells on our NWS property, focusing on areas that in the past have shown excellent results.”
Management continues to monitor and evaluate potential additions to its current derivative contracts. The Company has entered into derivative contracts in the form of costless collars of WTI Crude Oil prices in order to protect the Company’s cash flow from price fluctuation and maintain its capital programs. The trades were for a total of 5,500 barrels of oil per day (“BOPD”) and were for the period of April 2019 through December 2019. In addition, the Company entered into two “costless collar” contracts, each for 1,000 BOPD and are for the period of January 2020 through December 2020. The average prices for the 5,500 BOPD under contract for 2019 are: Floor = $50.00 Ceiling = $68.19. The average prices for the 2,000 BOPD under contract for 2020 are: Floor = $50.00 Ceiling = $65.61.
Mr. Kelly Hoffman, Ring’s Chief Executive Officer, stated, “When we announced our preliminary CAPEX in April, we expected to increase it based on maintaining a two-rig drilling program and performing the necessary upgrades to infrastructure and existing wells on our existing properties (CBP / N. Gaines / Delaware). Upon completion of the Wishbone property, and after examination of the asset, it became very apparent that by redirecting funds earmarked for drilling to accomplish those upgrades on our two primary assets (CBP / NWS) would have a very positive effect and bring us closer, with greater certainty, to our goal of cash flow neutrality by year-end. We are in a very unstable commodity environment. The “energy” sector, as a whole, is definitely out of favor, and the only factor that appears to have the investment community’s attention is the ability to operate within cash flow. That has been and continues to be our primary focus. Our stock, by any valuation method, is tremendously undervalued. We were recently notified that one of our largest institutional shareholders had decided to close its doors on 6/30 due to the retirement of one of the founders and had redistributed its position in REI stock to its investors. We are also investigating the dramatic increase in the “short” position in the Company’s stock. As CEO of this Company, I can assure all our shareholders that their Company continues to operate efficiently and effectively. We have built a tremendous group of assets which will provide years of opportunity and growth. Although we took on additional debt with the Wishbone acquisition, we have no need now or the foreseeable future to access the capital markets and stand ready to accelerate our operations and drilling activity when we see a more stable market.”
The 2019 CAPEX budget is subject to change based on market conditions, commodity price changes, rig availability, drilling results and general operational results.
About Ring Energy, Inc.
Ring Energy, Inc. is an oil and gas exploration, development and production company with current operations in Texas and New Mexico.
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, 2018, its Form 10Q for the quarter ended March 31, 2019 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.
For further information contact:
Bill Parsons
K M Financial, Inc.
(702) 489-4447
Exhibit 99.4
FOR IMMEDIATE RELEASE
| August 2, 2019 | NYSE American: REI |
RING ENERGY, INC., SCHEDULES CONFERENCE CALL ON ITS 2019 SECOND QUARTER FINANCIAL AND OPERATING HIGHLIGHTS
Midland, TX. August 2, 2019 – Ring Energy, Inc. (NYSE American: REI) (“Ring”) (“Company”) has scheduled a conference call on Thursday, August 8, 2019 at 12:00 p.m. ET to discuss the 2019 second quarter financial and operating results. Ring expects to issue a press release summarizing these results after the close of market on Wednesday, August 7, 2019.
To participate, dial 877-709-8150 at least five minutes before the call is to begin. Please reference the Ring Energy conference call. International callers may also participate by dialing 201-689-8354. A telephone replay will also be available for one week beginning two hours after the completion of the live call, and can be accessed by dialing 877-660-6853, or 201-612-7415 for international callers, and entering the conference ID 13693496 when prompted. The results will also be available via live and a 3 month archived webcast at
http://public.viavid.com/index.php?id=135758.
About Ring Energy, Inc.
Ring Energy, Inc. is an oil and gas exploration, development and production company with current operations in Texas and New Mexico.
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, 2018, its Form 10Q for the quarter ended March 31, 2019 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.
For further information contact:
Bill Parsons
K M Financial, Inc.
(702) 489-4447
Cover |
Jul. 17, 2019 |
|---|---|
| Cover [Abstract] | |
| Document Type | 8-K |
| Amendment Flag | false |
| Document Period End Date | Jul. 17, 2019 |
| Entity File Number | 001-36057 |
| Entity Registrant Name | Ring Energy, Inc. |
| Entity Central Index Key | 0001384195 |
| Entity Tax Identification Number | 90-0406406 |
| Entity Incorporation, State or Country Code | NV |
| Entity Address, Address Line One | 901 West Wall St. 3rd Floor |
| Entity Address, City or Town | Midland |
| Entity Address, State or Province | TX |
| Entity Address, Postal Zip Code | 79702 |
| City Area Code | 432 |
| Local Phone Number | 682-7464 |
| Written Communications | false |
| Soliciting Material | false |
| Pre-commencement Tender Offer | false |
| Pre-commencement Issuer Tender Offer | false |
| Title of 12(b) Security | Common Stock, $0.001 par value |
| Trading Symbol | REI |
| Security Exchange Name | NYSEAMER |
| Entity Emerging Growth Company | false |