LATEST PRESS RELEASE
  

FOR IMMEDIATE RELEASE
August 8, 2017 NYSE American: REI

RING ENERGY, INC. ANNOUNCES SECOND QUARTER AND SIX MONTH 2017 FINANCIAL
AND OPERATING RESULTS

Midland, TX. August 8, 2017 – Ring Energy, Inc. (NYSE American: REI) (“Ring”)(“Company”) announced today financial results for the three months and six months ended June 30, 2017. For the three month period ended June 30, 2017, Ring had oil and gas revenues of $14,503,309, compared to $7,104,609 for the quarter ended June 30, 2016. For the six month period ended June 30, 2017, the Company reported oil and gas revenues of $26,747,102, compared to oil and gas revenues of $13,196,997 for the six month period ended June 30, 2016.

For the three months ended June 30, 2017, Ring reported net income of $1,910,763, or $0.04 per diluted share. For the six months ended June 30, 2017, the Company reported net income of $3,190,044, or $0.06 per diluted share. This information compares to a net loss of $15,941,500, or $0.41 per fully diluted share for the three months ended June 30, 2016, which included a pre-tax non-cash impairment of $25,451,988. Excluding the impairment, the net loss per diluted share would have been $0.00. For the six month period ended June 30, 2016, the Company reported a net loss of $31,216,544, or $0.90 per fully diluted share, which included a pre-tax non-cash impairment of $46,864,074. Excluding the impairment, the net loss per diluted share would have been $0.05.

For the three months ended June 30, 2017, oil sales volume increased to 306,402 barrels, compared to 160,925 barrels for the same period in 2016, a 90% increase, and gas sales volume decreased to 190,044 MCF (thousand cubic feet), compared to 201,992 MCF for the same period in 2016, a 6% decrease. For the six months ended June 30, 2017, oil sales volume increased to 546,662 barrels, compared to 352,303 barrels for the same period in 2016, a 55% increase and gas sales volume decreased to 358,393 MCF, compared to 458,740 MCF for the same period in 2016, a 22% decrease.

The average commodity prices received by the Company were $45.34 per barrel of oil and $3.22 per MCF of natural gas for the quarter ended June 30, 2017, compared to $41.22 per barrel of oil and $2.33 per MCF of natural gas for the quarter ended June 30, 2016. The average prices received for the six months ended June 30, 2017 were $46.81 per barrel of oil and $3.23 per MCF of natural gas, compared to $34.69 per barrel of oil and $2.13 per MCF of natural gas for the six month period ended June 30, 2016.

Lease operating expenses, including production taxes, for the three months ended June 30, 2017 were $12.44 per barrel of oil equivalent (“BOE”), a 5% decrease from the prior year. Depreciation, depletion and amortization costs, including accretion, increased 13% to $15.70 per BOE. General and administrative costs, which included a $812,082 charge for stock based compensation, were $7.00 per BOE, a 29% decrease. For the six months ended June 30, 2017, lease operating expenses, including production taxes, were $12.36 per BOE, a 1% decrease. Depreciation, depletion and amortization costs, including accretion, were $14.71 per BOE, a 2% increase, and general and administrative costs, which included a $1,803,292 charge for stock based compensation, were $8.59 per BOE, an 11% decrease from 2016.

Cash provided by operating activities, before changes in working capital, for the three and six months ended June 30, 2017 was $8,791,004, or $0.17 per fully diluted share, and $16,012,940, or $0.32 per fully diluted share, compared to $3,135,349 and $4,389,664, or $0.08 and $0.13 per fully diluted share for the same periods in 2016. Earnings before interest, taxes, depletion and other non-cash items (“Adjusted EBITDA”) for the three and six months ended June 30, 2017 was $8,743,693, or $0.17 per fully diluted share, and $15,848,950, or $0.31 per fully diluted share, compared to $3,147,720 and $4,814,656, or $0.08 and $0.14 in 2016. (See accompanying table for a reconciliation of net income to adjusted EBITDA).

There was no outstanding debt on the Company’s $500 million senior secured credit facility at June 30, 2017.

Ring’s Chief Executive Officer, Mr. Kelly Hoffman, stated, “The second quarter was a reflection of the continued hard work of our staff in reducing our operating costs and general overhead while maximizing our production. We have continued to improve and upgrade the infrastructure on our Central Basin Platform (“CBP”) asset in support of our horizontal drilling and development program, which has exceeded our expectations. In April, we acquired an additional 33,000 acres in Gaines County, Texas. The entire acreage is located in our “horizontal footprint”, with over 50% of it contiguous to the Company’s existing leases. We drilled eight new horizontal wells, making a total of 16 new horizontal wells in the first six months of 2017. As a result we have seen our production increase over 75% from a year ago and over 25% from the first quarter of 2017. We continue to be hopeful commodity prices will improve and stabilize. We have no long term debt. We not only strengthened the balance sheet with our recently completed public stock offering (July 2017), but positioned the Company to be able to accelerate the development of our CBP by extending the contract on our first drilling rig through the end of 2017 and contracted a second drilling rig to begin work in mid-August. In addition, we are postured and prepared to take advantage of any acquisition opportunities that meet our requirements and compliment our existing acreage.”

Non-GAAP Financial Measures:

Net income for the three months ended June 30, 2017 includes a non-cash charge for stock based compensation of $812,082. Excluding this item, the Company’s net earnings would have been $0.05 per diluted share. Net income for the six months ended June 30, 2017 includes a non-cash charge for stock based compensation of $1,803,292. Excluding this item, the Company’s net income would have been $0.09 per diluted share. 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.

RING ENERGY, INC.
STATEMENTS OF OPERATIONS
  Three Months Ended
June 30,
Six Months Ended
June 30,
 
2017
(Unaudited)
2016
(Unaudited)
2017
(Unaudited)
2016
(Unaudited)
Oil and Gas Revenues
$ 14,503,309 $ 7,104,609 $ 26,747,102 $ 13,196,997
         
Cost and Operating Expenses
       
     Oil and gas production costs 3,514,375 2,200,109 6,219,746 4,690,543
     Oil and gas production taxes 691,174 344,035 1,274,438 643,306
     Depreciation, depletion and amortization 5,136,426 2,579,201 8,610,445 5,973,828
     Ceiling test impairment 25,451,988 46,864,074
     Accretion expense 173,573 124,976 310,749 234,354
     General and administrative expense 2,366,149 1,920,387 5,207,260 4,140,459
         
     Total Costs and Operating Expenses 11,881,697 32,620,696 21,622,638 62,546,564
         
Income (Loss) from Operations 2,621,612 (25,516,087) 5,124,464 (49,349,567)
         
Other Income        
     Interest expense (86,538) (502,046)
     Interest income 47,311 74,166 163,990 77,053
         
     Net Other Income 47,311 (12,372) 163,990 (424,993)
         
Income (Loss) Before Provision for Income Taxes 2,668,923 (25,528,459) 5,288,454 (49,774,560)
         
(Provision for) Benefit From Income Taxes (758,160) 9,586,959 (2,098,410) 18,558,016
         
Net Income (Loss) $1,910,763 ($15,941,500) $3,190,044 ($31,216,544)
         
Basic Earnings (Loss) Per Common Share $0.04 ($0.41) $0.06 ($0.90)
Diluted Earnings (Loss) Per Common Share $0.04 ($0.41) $0.06 ($0.90)
       
Basic Weighted-Average Common Shares Outstanding 49,156,895 38,625,307 49,135,929 34,509,833
Diluted Weighted-Average Common Shares Outstanding 50,474,397 38,625,307 50,434,490 34,509,833
     

RING ENERGY, INC.
COMPARATIVE OPERATING STATISTICS
    Three Months Ended June 30,
    2017 2016 Change
Net Production - BOE per day
  3,715 2,138 74%
Per BOE:        
     Average Sales Price   $ 42.90 $ 36.51 18%
             
     Lease Operating Expenses   $ 10.40 $ 11.31 -8%
     Production Taxes   $ 2.04 $ 1.76 16%
     DD&A   $ 15.19 $ 13.25 15%
     Accretion   $ 0.51 $ 0.65 -22%
     General and Administrative Expenses   $ 7.00 $ 9.87 -29%
    Six Months Ended June 30,
    2017 2016 Change
Net Production - BOE per day
  3,350 2,356 42%
Per BOE:        
     Average Sales Price   $ 44.11 $ 30.78 43%
             
     Lease Operating Expenses   $ 10.26 $ 10.94 -6%
     Production Taxes   $ 2.10 $ 1.50 40%
     DD&A   $ 14.20 $ 13.93 2%
     Accretion   $ 0.51 $ 0.55 -7%
     General and Administrative Expenses   $ 8.59 $ 9.66 -11%

RING ENERGY, INC.
CONSOLIDATED BALANCE SHEET
 
June 30,
2017
December 31,
2016
ASSETS
   
Current Assets
   
     Cash $ 12,136,378 $ 71,086,381
     Accounts receivable 8,010,885 3,453,236
     Joint interest billing receivable 845,448 454,461
     Prepaid expenses and retainers 419,796 226,835
     Total Current Assets 21,412,507 75,220,915
Properties and Equipment    
     Oil and Natural Gas properties subject to amortization 335,043,354 250,133,965
     Inventory for property development 1,877,327 1,582,427
     Fixed assets subject to depreciation 1,735,910 1,549,311
        Total Property and Equipment 338,656,591 253,265,703
     Accumulated depreciation, depletion and amortization (49,957,597) (41,347,152)
     Net Property and Equipment 288,698,994 211,918,551
Deferred Income Taxes 19,549,961 20,051,908
Deferred Financing Costs 270,684 406,025
Total Assets $ 329,032,146 $307,597,399
     
LIABILITIES AND STOCKHOLDERS' EQUITY    
Current Liabilities    
     Accounts payable $ 24,523,864 $ 9,099,391
     Total Current Liabilities 24,523,864 9,099,391
     
     Asset retirement obligations 8,434,710 7,957,035
     Total Liabilites 32,958,574 17,056,426
     
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
   
     49,168,243 shares and 49,113,063 shares
     outstanding, respectively
49,168 49,113
     Additional paid-in capital 336,843,882 335,197,845
     Retained Loss (39,919,478) (44,705,985)
     Total Stockholders' Equity 296,973,572 290,540,973
Total Liabilities and Stockholders' Equity $ 329,932,146 $ 307,597,399
     

RING ENERGY, INC.
STATEMENTS OF CASH FLOW
   
  Six Months Ended
June 30,
 
2017
2016
Cash Flows From Operating Activities
   
     Net Income (loss) $ 3,190,044 ($31,216,544)
     Adjustments to reconcile net income to net cash used in operating activities:    
       Depreciation, depletion and amortization 8,610,445 5,973,828
       Ceiling test impairment 46,864,074
       Accretion expense 310,749 234,354
       Shared-based compensation 1,803,292 1,091,967
       Deferred income tax provision (benefit) 1,787,513 (18,558,015)
       Excess tax deficiency (benefit) related to shared-based compensation 310,897
     Changes in assets and liabilities:    
       Accounts receivable (4,948,634) 417,610
       Prepaid expenses and retainers (57,620) 3,475
       Accounts payable 7,424,473 (7,778,590)
       Settlement of asset retirement obligation (309,511) (1,344)
Net Cash Provided by (Used in) Operating Activities 18,121,648 (2,969,185)
Cash Flows from Investing Activities    
     Payments to purchase oil and natural gas properties (24,727,390) (1,804,590)
     Payments to develop oil and natural gas properties (49,184,297) (6,616,360)
     Purchase of inventory for development (2,816,165)
     Purchase of equipment, vehicles and leasehold improvements (186,599)
     Net Cash Used in Investing Activities (76,914,451) (8,420,950)
Cash Flows from Financing Activities    
     Amounts paid for registration statement for future offerings (157,200)
     Proceeds from issuance of common stock 61,074,997
     Proceeds from issuance of notes payable 5,000,000
     Principal payments on revolving line of credit (50,900,000)
     Proceeds from option exercise 112,500
Net Cash Provided by Financing Activities (157,200) 15,287,497
Net Decrease in Cash (58,950,003) 3,897,362
Cash at Beginning of Period 71,086,381 4,431,350
Cash at End of Period $ 12,136,378 ($ 8,328,712)
     
Supplemental Cash Flow Information    
     Cash paid for interest 468,777
     
Non-Cash Investing and Financing Activities    
     Asset retirement obligation incurred during development 476,437 87,059
     Use of inventory in property development 2,521,265
     Capitalized expenditures attributable to drilling projects
     financed through current liabilities
$8,000,000
     
RECONCILIATION OF CASH FLOW FROM OPERATIONS
Net cash provided by operating activities $ 18,121,648 ($2,969,185)
Change in operating assets and liabilities (2,108,708) 7,358,849
     
Cash flow from operations $ 16,012,940 664
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
 
June 30,
2017
June 30,
2016
NET INCOME
$ 3,190,044 ($31,216,544)
     
     Interest (Income) (163,990) (77,053)
     Interest expense 502,046
     Interest tax expense (benefit) 2,098,410 (18,558,016)
     Depreciation, depletion and amortization 8,610,445 5,973,828
     Accretion of discounted liabilities 310,749 234,354
     Ceiling test impairment 46,864,074
     Shared-based compensation 1,803,292 1,091,967
     
ADJUSTED EBITDA $ 15,848,950 $ 4,814,656
     


About Ring Energy, Inc.
Ring Energy, Inc. is an oil and gas exploration, development and production company with current operations in Texas.
www.ringenergy.com

Safe Harbor Statement
This release contains forward-looking statements within the meaning of the “safe-harbor” provisions of the Private Securities Litigation Reform Act of 1995 that involve a wide variety of risks and uncertainties, including, 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, 2016, its Form 10-Q for the quarter ended June 30, 2017 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. announced today financial results for the three months and six months ended June 30, 2017. For the three month period ended June 30, 2017, Ring had oil and gas revenues of $14,503,309, compared to $7,104,609 for the quarter ended June 30, 2016. For the six month period ended June 30, 2017, the Company reported oil and gas revenues of $26,747,102, compared to oil and gas revenues of $13,196,997 for the six month period ended June 30, 2016.  
 


 
   
   

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Ring Energy, Inc. is an independent oil and gas exploration company with headquarters in Midland, Texas. Ring Energy’s business strategy is focused on the exploration, development and acquisition of oil and natural gas properties in the Permian and Mid-Continent regions of the United States.

   
   

 

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