StockSelector.com
  Research, Select, & Monitor Tuesday, October 20, 2020 9:59:06 AM ET  
Trade Ideas The Market Industries Stocks Portfolio

 
Ticker Lookup
Ring Energy Inc$0.68$.011.03%

  Quote | Ranking | Chart | Valuations | Sentiment | Industry | News | Earnings | Analysts | More...

Your Target?

 Ring Energy Announces First Quarter 2020 Financial and Operational Results
   Monday, May 11, 2020 4:22:00 PM ET

MIDLAND, Texas--(BUSINESS WIRE)--Ring Energy, Inc. (NYSEAM: REI) (“Ring”) (“Company”) announced today financial results for the three months ended March 31, 2020. For the three-month period ended March 31, 2020, the Company reported oil and gas revenues of $39,570,328 compared to revenues of $41,798,315 for the quarter ended March 31, 2019.

For the three months ended March 31, 2020, Ring reported net income of $43,804,118, or $0.64 per diluted share, compared to net income of $4,269,260, or $0.07 per fully diluted share for the three months ended March 31, 2019.



For the three months ended March 31, 2020, the net income included a pre-tax unrealized gain on derivatives of $47,086,681 and a non-cash charge for stock-based compensation of $673,795. Excluding these items, the net income per diluted share would have been $0.11. The Company believes results excluding these items 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 March 31, 2020, oil sales volume increased to 855,603 barrels, compared to 812,565 barrels (Included Wishbone Assets as of 2/1/19) for the same period in 2019, a 5.3% increase, and gas sales volume increased to 765,551 MCF (thousand cubic feet), compared to 396,264 MCF (Included Wishbone Assets as of 2/1/19) for the same period in 2019, a 93.2% increase. On a barrel of oil equivalent (“BOE”) basis for the three months ended March 31, 2020, production sales were 983,195 BOEs, compared to 878,609 BOEs (Included Wishbone Assets as of 2/1/19) for the same period in 2019, an 11.9% increase, and 1,053,234 BOEs for the fourth quarter of 2019, a 6.6% decrease.

The average commodity prices received by the Company were $45.16 per barrel of oil and $1.22 per MCF of natural gas for the quarter ended March 31, 2020, compared to $50.31 per barrel of oil and $2.32 per MCF of natural gas for the quarter ended March 31, 2019. On a BOE basis for the three-month period ended March 31, 2020, the average price received was $40.25, compared to $47.57 per BOE for the three months ended March 31, 2019.

The average price differential the Company experienced from WTI pricing in the first quarter 2020 was approximately $2.00.

Management reviewed the derivative contracts (“Hedges”) it currently has in place for 2020 in the form of costless collars of NYMEX WTI Crude Oil, with an offsetting put option (“floor”) and call option (“ceiling”). The contracts are for a total of 5,500 barrels of oil per day for the period of January 2020 through December 2020. The costless collar pricing does not take into account any pricing differentials between NYMEX WTI pricing and the price received by the Company.

1,000

 

 

 

$50.00

 

 

 

$65.83

1,000

 

 

 

$50.00

 

 

 

$65.40

1,000

 

 

 

$50.00

 

 

 

$58.40

1,000

 

 

 

$50.00

 

 

 

$58.25

1,500

 

 

 

$50.00

 

 

 

$58.65

The Company has also entered into derivative contracts for 2021 in the form of costless collars of NYMEX WTI Crude oil. The contracts are for a total of 4,500 barrels of oil per day for the period of January 2021 through December 2021. Again, the costless collar pricing does not take into account any pricing differentials between NYMEX WTI pricing and the price received by the Company.

1,000

 

 

 

$45.00

 

 

 

$54.75

1,000

 

 

 

$45.00

 

 

 

$52.71

1,000

 

 

 

$40.00

 

 

 

$55.08

1,500

 

 

 

$40.00

 

 

 

$55.35

Management restated that the Company’s “costless collars” are derivative financial contracts. While the Company enters into these contracts to protect its cash flow from operations, and the volumes it hedges are based on its anticipated production volumes, there is no requirement for the actual production to match the volumes it has hedged. Management may reduce production to a level that is below the volumes that are currently hedged and still receive a net payment equal to the difference between the hedged price and the average NYSE WTI price for the preceding month on the total amount hedged. As the NYSE WTI indexed price decreases, the amount the Company receives on its hedges increases.

Lease operating expenses (“LOE”), including production taxes, for the three months ended March 31, 2020 were $12.45 per BOE, equaling 30.9% of the quarter’s revenue and a 4.8% decrease from same period in 2019. Depreciation, depletion and amortization costs, including accretion, increased 5.8% to $14.15 per BOE from the first quarter 2019 and equaled 35.2% of the first quarter 2020 revenue. General and administrative costs, which included a $673,795 charge for stock-based compensation and $289,051 for an operating lease expense, were $3.38 per BOE, a 57.1% decrease from the first quarter 2019 and equaled 8.3% of the first quarter 2020 revenue.

Cash provided by operating activities, before changes in working capital, for the three months ended March 31, 2020 was $23,945,189, or $0.35 per fully diluted share, compared to $23,454,168, or $0.37 per fully diluted share for the same period in 2019. Earnings before interest, taxes, depletion and other non-cash items (“Adjusted EBITDA”) for the three months ended March 31, 2020 was $28,004,599, or $0.41 per fully diluted share, compared to $24,214,949, or $0.38 in 2019. (See accompanying table for a reconciliation of net income to adjusted EBITDA).

Total capital expenditures for the three months ended March 31, 2020 were approximately $16.0 million.

As of March 31, 2020, the outstanding balance on the Company’s $1 billion senior credit facility was $366.5 million. The weighted average interest rate on borrowings under the senior credit facility as of March 31, 2020 was 3.72%. The redetermination evaluation scheduled for May 2020 is currently in process.

On April 13, 2020, the Company drew $21.5 million on the Credit Facility, increasing the outstanding total to $388 million. Mr. Randy Broaddrick, Vice President and Chief Financial Officer, commented, “In mid-April, we drew down an additional $21.5 million to take advantage of discounts being offered by a number of our suppliers and vendors regarding payment of their invoices. To date, we have saved the Company over $2 million.”

On April 14, 2020, the Company announced it had entered into a Purchase and Sale Agreement on its Delaware Basin acreage. The sales price is $31.5 million. The Company has received a $500,000 non-refundable deposit and expects the transaction to close in approximately 30 - 45 days.

The Company’s Chief Executive Officer, Mr. Kelly Hoffman, stated, “The first quarter has been a challenging time for all oil companies. Prior to suspending all drilling operations in early March, the Company had drilled four new San Andres horizontal wells and completed two additional wells on its Northwest Shelf property. The four wells drilled in the first quarter continued to exceed our expectations with average IP rates over 600 BOE per day. All of our operations were performed on time and within budget. After attaining our primary goal of becoming cash flow positive by year end 2019, we continued it in the 1st quarter, being cash flow positive by approximately $7.9 million. As oil prices continued to drop and the differentials between spot prices and well head prices grew, management began cutting costs and conserving cash. In the absence of any additional drilling, we have made additional cuts to our capital expenditure budget (“CAPEX”) for 2020 and estimate it to be between $25-$27 million. With the hedges we have in place and the cost-cutting measures we have made to date, we are confident that Ring will come through these turbulent times and emerge postured to become a better and stronger company than before. We remain focused on the importance of strengthening our balance sheet. We announced we had entered into an agreement to sell our Delaware property and will use those proceeds to reduce our long term debt. Our core assets in the Northwest Shelf and Central Basin Platform offer us years of development and growth. We stand ready to resume drilling activity once we see stability in the marketplace return, and if that should occur, we will keep everyone posted.”

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, 2019, its Form 10Q for the quarter ended March 31, 2020 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.

RING ENERGY, INC. 
STATEMENTS OF OPERATIONS 
   

Three Months Ended

 

 

 

 

 

 

 

 

 

 
   
Oil and Gas Revenues

$

39,570,328

 

 

$

41,798,315

 

 
   
Costs and Operating Expenses  
Oil and gas production costs

 

10,378,461

 

 

 

9,408,764

 

 
Oil and gas production taxes

 

1,870,245

 

 

 

2,082,875

 

 
Depreciation, depletion and amortization

 

13,682,996

 

 

 

12,929,054

 

 
Asset retirement obligation accretion

 

231,962

 

 

 

215,945

 

 
Lease expense

 

289,051

 

 

 

128,175

 

 
General and administrative expense

 

3,035,895

 

 

 

6,798,017

 

 
   
Total Costs and Operating Expenses

 

29,488,610

 

 

 

31,562,830

 

 
   
Income (Loss) from Operations

 

10,081,718

 

 

 

10,235,485

 

 
   
Other Income (Expense)   
Interest income

 

5

 

 

 

12,236

 

 
Interest expense

 

(4,248,498

)

 

 

(773,017

)

 
Realized gain on derivatives

 

3,334,128

 

 

 

-

 

 
Unrealized gain (loss) on change in fair value of derivatives

 

47,086,681

 

 

 

(340,685

)

 
   
Net Other Income (Expense)

 

46,172,316

 

 

 

(1,101,466

)

 
   
Income Before Provision for Income Taxes

 

56,254,034

 

 

 

9,134,019

 

 
   
(Provision for) Income Taxes

 

(12,449,916

)

 

 

(4,864,759

)

 
   
Net Income (Loss)

$

43,804,118

 

 

$

4,269,260

 

 
   
Basic Earnings (Loss) Per Common Share

$

0.64

 

 

$

0.07

 

 
Diluted Earnings (Loss) Per Common Share

$

0.64

 

 

$

0.07

 

 
   
   
Basic Weighted-Average Common Shares Outstanding

 

67,993,797

 

 

 

63,229,710

 

 
Diluted Weighted-Average Common Shares Outstanding

 

67,997,092

 

 

 

63,992,549

 

 
COMPARATIVE OPERATING STATISTICS
     
Three Months Ended March 31,

 

2020

 

 

2019

 

Change

 

% of 1st Qrt.
2020 Revenue

     
Net Sales - BOE per day

 

10,804

 

 

9,762

 

10.7

%

  
Per BOE:    
Average Sales Price

$

40.25

 

$

47.57

 

-15.4

%

  
     
Oil and Gas Production Costs

 

10.55

 

 

10.71

 

-1.5

%

 

26.2

%

 
Production Taxes

 

1.90

 

 

2.37

 

-19.8

%

 

4.7

%

 
DD&A

 

13.92

 

 

14.72

 

-5.4

%

 

34.6

%

 
Accretion

 

0.24

 

 

0.25

 

-4.0

%

 

0.6

%

 
General & Administrative Expenses

 

3.09

 

 

7.74

 

-60.0

%

 

7.6

%

 
Lease Expense

 

0.29

 

 

0.15

 

93.3

%

 

0.7

%

 
RING ENERGY, INC.
BALANCE SHEET
 

March 31,

December 31,

 

 

 

 

 
ASSETS
Current Assets
Cash

$

12,531,388

 

$

10,004,622

 

Accounts receivable

 

12,027,477

 

 

22,909,195

 

Joint interest billing receivable

 

2,444,702

 

 

1,812,469

 

Derivative receivable

 

3,334,128

 

 

-

 

Derivative asset

 

34,056,600

 

Prepaid expenses and retainers

 

397,802

 

 

3,982,255

 

Total Current Assets

 

64,792,097

 

 

38,708,541

 

Property and Equipment
Oil and natural gas properties subject to amortization

 

1,100,005,708

 

 

1,083,966,135

 

Financing lease asset subject to depreciation

 

858,513

 

 

858,513

 

Fixed assets subject to depreciation

 

1,465,551

 

 

1,465,551

 

Total Property and Equipment

 

1,102,329,772

 

 

1,086,290,199

 

Accumulated depreciation, depletion and amortization

 

(170,757,041

)

 

(157,074,044

)

Net Property and Equipment

 

931,572,731

 

 

929,216,155

 

Operating lease asset

 

1,577,993

 

 

1,867,044

 

Derivative asset

 

10,030,002

 

 

-

 

Deferred Financing Costs

 

3,025,326

 

 

3,214,408

 

Total Assets

$

1,010,998,149

 

$

973,006,148

 

 
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Accounts payable

$

39,051,572

 

$

54,635,602

 

Financing lease liability

 

284,630

 

$

280,970

 

Operating lease liability

$

1,056,690

 

$

1,175,904

 

Derivative liabilities

 

-

 

 

3,000,078

 

Total Current Liabilities

 

40,392,892

 

 

59,092,554

 

 
Deferred income taxes

 

18,451,092

 

 

6,001,176

 

Revolving line of credit

 

366,500,000

 

 

366,500,000

 

Financing lease liability, less current portion

 

352,660

 

 

424,126

 

Operating lease liability, less current portion

 

521,303

 

 

691,140

 

Asset retirement obligations

 

16,792,356

 

 

16,787,219

 

Total Liabilities

 

443,010,303

 

 

449,496,215

 

 
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;
67,993,797 shares and 67,993,797 shares
issued and outstanding, respectively

 

67,994

 

 

67,994

 

Additional paid-in capital

 

526,975,076

 

 

526,301,281

 

Accumulated deficit

 

40,944,776

 

 

(2,859,342

)

Total Stockholders' Equity

 

567,987,846

 

 

523,509,933

 

Total Liabilities and Stockholders' Equity

$

1,010,998,149

 

$

973,006,148

 

 
RING ENERGY, INC.
STATEMENTS OF CASH FLOW
Three Months Ended
March 31,March 31,

 
Cash Flows From Operating Activities
Net income (loss)

$43,804,118

$4,269,260

Adjustments to reconcile net income (loss) to net cash
Provided by operating activities:
Depreciation, depletion and amortization

13,682,996

12,929,054

Accretion expense

231,962

215,945

Amortization of deferred financing costs

189,082

-

Share-based compensation

673,795

834,465

Deferred income tax provision

12,028,380

1,918,144

Excess tax deficiency related to share-based compensation

421,536

2,946,615

Change in fair value of derivative instruments

(47,086,680)

340,685

Changes in assets and liabilities:
Accounts receivable

6,915,357

(15,808,739)

Prepaid expenses and retainers

3,584,453

180,452

Accounts payable

(6,614,029)

2,111,804

Settlement of asset retirement obligation

(293,212)

(107,770)

Net Cash Provided by Operating Activities

27,537,758

9,829,915

Cash Flows from Investing Activities
Payments to purchase oil and natural gas properties

(480,048)

(13,358,132)

Payments to develop oil and natural gas properties

(24,463,138)

(42,228,740)

Net Cash Used in Investing Activities

(24,943,186)

(55,586,872)

Cash Flows From Financing Activities
Proceeds from revolving line of credit

-

45,000,000

Reduction of financing lease liabilities

(67,806)

-

Net Cash Provided by Financing Activities

(67,806)

45,000,000

Net Change in Cash

2,526,766

(756,957)

Cash at Beginning of Period

10,004,622

3,363,726

Cash at End of Period

$12,531,388

$2,606,769

Supplemental Cash flow Information
Cash paid for interest

$4,211,754

$708,951

 
Noncash Investing and Financing Activities
Asset retirement obligation incurred during development

66,387

175,173

Capitalized expenditures attributable to drilling projects
financed through current liabilities

6,200,000

34,605,000

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)

Acquisition payable to be settled through equity

-

(28,356,396)

Acquisition payable to be settled through cash payment

-

(256,877,766)

Oil and gas properties subject to amortization

-

285,119,721

 
RECONCILIATION OF CASH FLOW FROM OPERATIONS
 
Net cash provided by operating activities

$27,537,758

$9,829,915

Change in operating assets and liabilities

(3,592,569)

13,624,253

 
Cash flow from operations

$23,945,189

$23,454,168

Management believes that the non-GAAP measure of cash flow from operations is useful information for investors
because it is used internally and is accepted by the investment community as a means of measuring the
Company's ability to fund its capital program. It is also used by professional research 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
   
 Three Months Ended
 March 31, March 31,
 

 

 

 

 

   
NET INCOME 

$

43,804,118

 

 

$

4,269,260

   
Net other (income) expense 

 

(46,172,316

)

 

 

1,101,466

Realized (gain) on derivatives 

 

3,334,128

 

 

 

-

Income tax expense 

 

12,449,916

 

 

 

4,864,759

Depreciation, depletion and amortization 

 

13,682,996

 

 

 

12,929,054

Accretion of discounted liabilities 

 

231,962

 

 

 

215,945

Stock based compensation 

 

673,795

 

 

 

834,465

   
ADJUSTED EBITDA 

$

28,004,599

 

 

$

24,214,949

 

Bill Parsons
K M Financial, Inc.
(702) 489-4447

Source: Ring Energy, Inc.



Register |  Password |  Feedback |  Copyright |  Usage Agreement |  Privacy Policy |  Advertising |  About Us |  Contact Us |  FAQ 

Past performance is not indicative of future results

StockSelector.com, the StockSelector.com logo, and News Selects are trademarks of StockSelector.com.
Copyright © 1998 - 2020 StockSelector.com. All rights reserved.