Press Release
  

FOR IMMEDIATE RELEASE
May 9, 2016 NYSE MKT: REI

RING ENERGY ANNOUNCES FINANCIAL AND OPERATING RESULTS FOR FIRST QUARTER 2016

Midland, TX. May 9, 2016 – Ring Energy, Inc. (NYSE MKT: REI) (“Ring”)(“Company”) announced today financial results for the first quarter ended March 31, 2016. For the three month period ended March 31, 2016, Ring had oil and gas revenues of $6,092,388 compared to $6,045,701 for the quarter ended March 31, 2015, and a net loss of $15,275,044, or $0.50 per diluted share, which included a pre-tax non-cash impairment of $21,412,086, compared to a net loss of $975,624, or $0.04 per diluted share, for the same period in 2015. Excluding the after tax impact of the impairment, the net loss per diluted share for the three month period ended March 31, 2016 would have been $0.06.

The Company’s sales volumes were significantly higher during the three months ended March 31, 2016, as compared to the same period in 2015; however this was offset by lower oil and gas prices received. For the three months ended March 31, 2016, oil sales volume increased to 191,377 barrels, compared to 137,090 barrels for the same period in 2015, a 39.6% increase and gas sales volume increased to 256,748 MCF (thousand cubic feet), compared to 19,848 MCF for the same period in 2015, a 1,193.5% increase. The average commodity prices received by Ring were $29.20 per barrel of oil and $1.97 per MCF of natural gas for the quarter ended March 31, 2016, compared to $43.76 per barrel of oil and $2.36 per MCF of natural gas for the quarter ended March 31, 2015.

Lease operating expenses, including production taxes, for the three months ended March 31, 2016 were $11.91 per barrel of oil equivalent (“BOE”), a 22% decrease from the prior year. Depreciation, depletion and amortization costs, including accretion, decreased 43.5% to $14.97 per BOE. General and administrative costs, which included a $584,325 charge for stock based compensation, were $9.48 per BOE, a 23% decrease.

Cash provided by operating activities, before changes in working capital, for the three months ended March 31, 2016 was $1,254,315 or $0.04 per fully diluted share, compared to $2,827,356, or $0.11 per fully diluted share for the same period in 2015. Earnings before interest, taxes, depletion and other non-cash items (“Adjusted EBITDA”) for the three months ended March 31, 2016 was $1,666,936, or $0.05 per fully diluted share, compared to $2,826,576, or $0.11 per fully diluted share for the same period in 2015.
(See accompanying table for a reconciliation of net income to adjusted EBITDA).
There was outstanding debt of $50,900,000 on the Company’s $500 million senior secured credit facility at March 31, 2016. Subsequent to March 31, 2016, the Company completed an underwritten public offering of 11,500,000 shares of common stock at a price to the public of $5.60 per share. The net proceeds of the offering were approximately $61 million. The Company paid all principal of $50.9 million and related interest outstanding under the Credit Facility.

Ring’s Chief Executive Officer, Mr. Kelly Hoffman, stated, “During the first quarter we drilled and completed one new vertical well on our Central Basin property, while continuing to upgrade the existing infrastructure on both the Central Basin and Delaware Basin assets, with specific attention to our salt water disposal system. Our staff has done an excellent job of increasing production while reducing costs during this time of low commodity prices. We have continued to monitor and analyze the results of surrounding operators that are having excellent results using horizontal drilling techniques on the San Andres formation. In late April we completed a public offering of our common stock which has allowed the Company to pay all principal and interest on our credit facility, as well as announce a capital expenditure budget and development program for the remainder of 2016. The budget includes funds to drill seven new vertical wells and three horizontal wells. Also included are funds for remedial work, leasing, and continued upgrading of our current infrastructure. We have excellent assets, a strong balance sheet and are ready to start drilling.”

Non-GAAP Financial Measures:

Net loss for the three months ended March 31, 2016 includes a non-cash charge for stock based compensation of $584,325, and a ceiling test impairment charge of $21,412,086. Excluding such items, the Company’s net loss would have been $0.05 per diluted share for the three months ended March 31, 2016. 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
March 31,
   
2016
(Unaudited)
2015
(Unaudited)
Oil and Gas Revenues
    $ 6,092,388 $ 6,045,470143
     
Cost and Operating Expenses
   
     Oil and gas production costs     2,490,434 1,867,795
     Oil and gas production taxes     299,271 277,031
     Depreciation, depletion and amortization     3,394,627 3,654,298
     Ceiling test impairment     21,412,086
     Asset retirement obligation accretion     109,378 66,979
     General and administrative expense     2,220,072 1,728,987
     
     Total Costs and Operating Expenses     29,925,868 7,595,090
         
     Loss from Operations     (23,833,480) (1,549,389)
     
Other Income (Expense)    
     Interest income     2,887 780
     Interest expense     (415,508)
     
     Net Other Income     (412,621) 780
     
Loss Before Tax Provision     (24,246,101) (1,548,609)
     
Benefit From Income Taxes     8,971,057 572,985
     
Net Income (Loss)     ($15,275,044) ($975,624)
     
Basic Earnings (Loss) Per Common Share     ($0.50) ($0.04)
Diluted Earnings (Loss) Per Common Share     ($0.50) ($0.04)
         
Basic Weighted-Average Common Shares Outstanding     30,394,360 25,746,513
Diluted Weighted-Average Common Shares Outstanding     30,394,360 25,746,513
     

RING ENERGY, INC.
COMPARATIVE OPERATING STATISTICS
    Three Months Ended March 31,
    2016
2015
Change
Net Production - BOE per day
  2,573 1,560 65%
Per BOE:    
     Average Sales Price   $ 26.02 $ 43.06 -40%
             
     Lease Operating Expenses   10.63 13.30 -20%
     Production Taxes   1.28 1.97 -35%
     DD&A   14.50 26.03 -44%
     Accretion   0.47 0.48 0%
     General and Administrative Expenses   9.48 12.31 -23%

RING ENERGY, INC.
CONSOLIDATED BALANCE SHEET
 
March 31,
2016
December 31,
2015
ASSETS
   
Current Assets
   
     Cash $ 3,811,166 $ 4,431,350
     Accounts receivable 2,373,119 2,507,858
     Joint interest billing receivable 859,018 1,629,165
     Prepaid expenses and retainers 170,686 146,118
     Total Current Assets 7,213,989 8,714,491
Property and Equipment    
     Oil and Natural Gas properties subject to amortization 252,119,193 269,590,374
     Office equipment and automobiles 1,539,991 1,539,991
        Total Property and Equipment 253,659,184 271,130,365
     Accumulated depreciation, depletion and amortization (33,258,465) (29,863,838)
     Net Property and Equipment 220,400,719 241,266,527
Deferred Income Taxes 9,035,380 64,323
Deferred Financing Costs 609,038 820,904
Total Assets $ 237,259,126 $250,866,245
     
LIABILITIES AND STOCKHOLDERS' EQUITY    
Current Liabilities    
     Accounts payable $ 7,246,986 $11,023,269
     Other accrued liabilities 309,898
     Total Current Liabilities 7,246,986 11,333,167
     Long term debt 50,900,000 45,900,000
     Asset retirement obligation 7,549,231 7,401,950
     Total Liabilites 65,696,217 64,635,117
     
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
   
     30,396,942 shares and 30,391,942 shares
     outstanding, respectively
30,397 30,392
     Additional paid-in capital 193,875,854 193,269,034
     Retained Earnings (22,343,342) (7,068,298)
     Total Stockholders' Equity 171,562,909 186,231,128
Total Liabilities and Stockholders' Equity $ 237,259,126 $250,866,245
     

RING ENERGY, INC.
STATEMENTS OF CASH FLOW
   
  Three Months Ended
March 31
 
2016
2015
Cash Flows From Operating Activities
   
     Net Income ($15,275,044) ($975,624)
     Adjustments to reconcile net income (loss) to net cash
     provided by (used in) operating activities:
   
       Depreciation, depletion and amortization 3,394,627 3,654,298
       Ceiling test impairment 21,412,086
       Accretion expense 109,378 66,979
       Shared-based compensation 584,325 654,688
       Deferred income tax expense (benefit) (8,971,057) (572,985)
       Changes in assets and liabilities:    
       Accounts receivable 904,886 445,438
       Prepaid expenses 187,298 10,869
       Accounts payable (4,086,181) (9,332,248)
Net Cash Provided by Operating Activities (1,739,682) (6,048,585)
Cash Flows from Investing Activities    
     Payments to purchase oil and natural gas properties (643,116) (954,458)
     Payments to develop oil and natural gas properties (3,258,542) (8,667,163)
     Purchase of equipment, vehicles and leasehold improvements (164,404)
     Plugging and abandonment cost incurred (1,344)
     Net Cash Used in Investing Activities (3,903,002) (9,786,025)
Cash Flows from Financing Activities    
     Proceeds from issuance of notes payable 5,000,000 10,000,000
     Proceeds from option exercise 22,500 62,500
Net Cash Provided by Financing Activities 5,022,500 10,062,500
Net Increase (Decrease) in Cash (620,184) (5,772,110)
Cash at Beginning of Period 4,431,350 8,622,235
Cash at End of Period $ 3,811,166 $ 2,850,125
     
Supplemental Cash Flow Information    
     Cash paid for interest $352,662
     
Non-Cash Investing and Financing Activities    
     Asset retirement obligation incurred during development 39,247 $31,575
     
RECONCILIATION OF CASH FLOW FROM OPERATIONS
Net cash provided by operating activities ($1,739,682) ($6,048,585)
Change in operating assets and liabilities 2,993,997 8,875,941
     
Cash flow from operations $ 1,254,315 $ 2,827,356
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
 
 
March 31,
2014
March 31,
2015
NET INCOME (LOSS)
($15,275,044) ($975,624)
     
     Interest expense (Income) (2,887) (780)
     Interest expense 415,508
     Interest tax expense (benefit) (8,971,057) (572,985)
     Depreciation, depletion and amortization 3,394,627 3,654,298
     Accretion of discounted liabilities 109,378 66,979
     Ceiling test impairment 21,412,086
     Shared-based compensation 584,325 654,688
     
ADJUSTED EBITDA $ 1,666,936 $ 2,826,576
     


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

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, 2015. 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 office
(602) 315-5926 mobile



 
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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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