Press Release
  

FOR IMMEDIATE RELEASE
March 15, 2017 NYSE MKT: REI

RING ENERGY ANNOUNCES FINANCIAL AND OPERATIONAL RESULTS
FOR FOURTH QUARTER AND YEAR END 2016


Midland, TX. March 15, 2017 – Ring Energy, Inc. (NYSE MKT: REI) (“Ring”)(“Company”) announced today financial results for the three months and twelve months ended December 31, 2016. For the three month period ended December 31, 2016, Ring reported oil and gas revenues of $9,830,708, compared to revenues of $7,362,394 for the quarter ended December 31, 2015. For the twelve months ended December 31, 2016, the Company reported oil and gas revenues of $30,850,248, compared to $31,013,892 for the twelve months ended December 31, 2015. For the fourth quarter of 2016, Ring reported a net loss of $477,006, or $0.01 per diluted share. This information compares to a net loss of $7,473,046, or $0.25 per diluted share, which included a pre-tax non-cash impairment of $9,312,203, for the fourth quarter of 2015. Excluding the impairment, the net loss per diluted would have been $0.05. For the year ended December 31, 2016, the Company reported a net loss of $37,637,687, or $0.97 per diluted share, which included a pre-tax non-cash impairment of $56,513,016. Excluding the impairment, the net loss per diluted share would have been $0.02. This information compares to a net loss of $9,052,771, or $0.32 per diluted share, which included a pre-tax non-cash impairment of $9,312,203 for the year ended December 31, 2015. Excluding the impairment, the net loss per diluted share would have been $0.11.

For the three months ended December 31, 2016, oil sales volume increased to 201,041 barrels, compared to 180,694 barrels for the same period in 2015, an 11% increase, and gas sales volume increased to 211,893 MCF (thousand cubic feet), compared to 192,202 MCF for the same period in 2015, a 10% increase. On a barrel of oil equivalent (“BOE”) basis for the three months ended December 31, 2016, production sales increased to 236,357 BOEs, compared to 212,728 BOEs for the same period in 2015, an 11% increase. For the twelve months ended December 31, 2016, oil sales volume increased to 728,051 barrels, compared to 664,612 barrels for the same period in 2015, a 10% increase, and gas sales volume increased to 900,089 MCF, compared to 472,509 MCF for the same period in 2015, a 90% increase. On a BOE basis for the twelve months ended December 31, 2016, production sales increased to 878,066 BOEs, compared to 743,363 BOEs for the same period in 2015, an 18% increase.

The average commodity prices received by the Company were $45.99 per barrel of oil and $2.76 per MCF of natural gas for the quarter ended December 31, 2016, compared to $38.43 per barrel of oil and $2.18 per MCF of natural gas for the quarter ended December 31, 2015. The average prices received for the twelve months ended December 31, 2016 were $39.28 per barrel of oil and $2.50 per MCF of natural gas, compared to $44.90 per barrel of oil and $2.48 per MCF of natural gas for the twelve month period ended December 31, 2015.

Lease operating expenses, including production taxes, for the three months ended December 31, 2016 were $14.05 per BOE, a 10% decrease from the prior year. Depreciation, depletion and amortization costs, including accretion, decreased 28% to $12.98 per BOE. General and administrative costs, which included a $619,499 charge for stock based compensation, were $8.48 per BOE, a 19% decrease. For the twelve months ended December 30, 2016, lease operating expenses, including production taxes, were $12.95 per BOE, a 16% decrease. Depreciation, depletion and amortization costs, including accretion, were $13.63 per BOE, a 35% decrease, and general and administrative costs, which included a $2,267,053 charge for stock based compensation, were $9.14 per BOE, a 15% decrease.

Cash provided by operating activities, before changes in working capital, for the three and twelve months ended December 31, 2016 was $5,047,782, or $0.12 per fully diluted share, and $13,125,293, or $0.34 per fully diluted share, compared to $2,106,864 and $13,416,610, or $0.07 and $0.48 per fully diluted share for the same periods in 2015. Earnings before interest, taxes, depletion and other non-cash items (“Adjusted EBITDA”) for the three and twelve months ended December 31, 2016 was $5,125,854, or $0.12 per fully diluted share, and $13,717,804, or $0.35 per fully diluted share, compared to $2,421,885 and $14,158,760, or $0.08 and $0.50 in 2015. (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 December 31, 2016.

Proved reserves, as determined by Cawley, Gillespie and Associates, Inc., and Williamson Petroleum Consultants, Inc., totaled 27,741,575 barrel of oil equivalents (BOE), a 14% increase over the 24,402,383 BOE for the previous year. Future net revenues before income taxes, discounted at 10% (“PV-10”), based on $39.17 per barrel of oil and $2.43 per MCF of gas, were $217.3 million at year-end 2016. This compared to $240.2 million, using average prices of $48.17 per barrel of oil and $2.51 per MCF of gas, for year-end 2015. Approximately 32% of the proved reserves are classified as proved developed producing (“PDP”), 5% proved developed non-producing (“PDNP”), and 63% proved undeveloped (“PUD”). The proved reserves consist of approximately 90% oil and 10% natural gas. Internal engineering has estimated an additional 14.3 million BOE of probable reserves with a PV-10 of $73.5 million using average prices of $39.17 per barrel of oil and $2.47 per MCF of natural gas. The estimated combined totals for proved and probable reserves (2P) are 42.04 million BOE and $290.8 million PV-10.

Mr. Kelly Hoffman, the Company’s Chief Executive Officer, commented, “2016 started slowly as a year of patience and perseverance, and finished as one of pursuit and productivity. With low commodity prices continuing in early 2016, our staff did an excellent job of improving efficiencies by lowering operating costs while increasing production. We focused on improving and upgrading our infrastructure. In the first six months of 2016, we drilled four new development wells, three on our Central Basin Platform (“CBP”) and one on our Delaware Basin (“DB”) asset. We completed an internal study started in late 2015 of horizontal drilling operations and techniques in the CBP, specifically in the San Andres formation, and continued to monitor the results of surrounding operators using such techniques. In April 2016, we completed a public stock offering which allowed us to pay off the entire outstanding balance of our senior credit facility and put together a capital expenditure budget for the remainder of the year. In addition to the four vertical wells drilled in the first six months of 2016, we budgeted the drilling of four more new vertical development wells and the first three horizontal wells on our CBP. We initiated the drilling of the horizontal wells in the third quarter and announced the results in the fourth quarter. Based on those results, our staff has been busy building our “horizontal” footprint in the CBP. By year end, their efforts resulted in over 53,000 gross acres (32,000 net), of which we believe over 43,000 gross acres (26,000 net) represent horizontal acreage, with over 400 gross horizontal drilling locations. In November, we announced a preliminary capital expenditure budget of $70 million for 2017, which includes the drilling of twenty-two new horizontal wells, six new vertical development wells and continued upgrading of existing infrastructure on our CBP. In addition, it includes drilling eight new vertical wells, remedial work on twelve existing wells and upgrading current infrastructure on our Delaware Basin asset. In December 2016, we completed a second public stock offering with the proceeds from the offering being used to fund the 2017 expenditure budget. We are very pleased with the initial results we are seeing from our 2017 horizontal well drilling program, as they are meeting and/or exceeding the results we received on our pilot three-well horizontal drilling program at the end of 2016. Although we didn’t allocate funds in the preliminary 2017 budget for a horizontal development program on our Delaware Basin asset, we are very excited about the prospects of such a program based on the information and core samples we retrieved by drilling two vertical wells to the base of the Brushy Canyon shale. We enter 2017 focusing on the exceptional opportunities within our current asset base. We are positioned for sustained growth and continue to aggressively look for opportunities that would complement our core assets and fuel that growth.”

Non-GAAP Financial Measures:

Net loss for the three months ended December 31, 2016 includes a non-cash charge for stock based compensation of $619,499. Net loss for the twelve months ended December 31, 2016 includes a non-cash charge for stock based compensation of $2,267,053, and a ceiling test impairment charge of $56,513,016. Excluding such items, the Company’s net loss would have been $0.00 per diluted share for the three months ended December 31, 2016, and net earnings of $0.02 for the twelve months ended December 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
December 31,
Twelve Months Ended
December 31,
2016
2015
2016
2015
Oil and Gas Revenues
$ 9,830,708 $ 7,362,394 $ 30,850,248 $ 31,013,892
         
Costs and Operating Expenses
       
     Oil and gas production costs 2,848,029 2,967,232 9,867,800 9,958,380
     Oil and gas production taxes 472,285 357,811 1,504,620 1,468,073
     Depreciation, depletion and amortization 2,941,107 3,648,107 11,483,314 15,175,791
     Ceiling test impairment 9,312,203 56,513,016 9,312,203
     Accretion expense 127,015 168,118 487,182 418,384
     General and administrative expense 2,004,039 2,220,040 8,027,077 7,995,395
         
     Total Costs and Operating Expenses 8,392,701 18,673,511 87,883,009 44,328,226
         
     Income (Loss) from Operations 1,438,007 (11,311,117) (57,032,761) (13,314,334)
         
     Net interest expense (78,071) (315,021) (592,511) (742,150)
         
Income (Loss) Before Provision for Income Taxes 1,359,936 (11,828,138) (57,625,272) (14,056,484)
         
(Provision For) Benefit From Income Taxes (1,836,942) 4,153,092 19,987,585 5,003,713
         
Net Income (Loss) ($477,006) ($7,473,046) ($37,637,687) ($9,052,771)
       
Basic Earnings (Loss) Per Common Share ($0.01) ($0.25) ($0.97) ($0.32)
Diluted Earnings (Loss) Per Common Share ($0.01) ($0.25) ($0.97) ($0.32)
       
Basic Weighted-Average Common Shares Outstanding 43,814,351 30,391,485 38,710,626 28,176,924
Diluted Weighted-Average Common Shares Outstanding 43,814,351 30,391,485 38,710,626 28,176,924

RING ENERGY, INC.
COMPARATIVE OPERATING STATISTICS
    Three Months Ended December 31,
    2016
2015
Change
Net Production - BOE per day
  2,569 2,312 11%
Per BOE:        
     Average Sales Price   $ 41.59 $ 34.61 20%
             
     Lease Operating Expenses   12.05 13.95 -14%
     Production Taxes   2.00 1.68 19%
     DD&A   12.44 17.15 -27%
     Accretion   0.54 0.79 -32%
     General and Administrative Expenses   8.48 10.44 -19%

    Twelve Months Ended December 31,
    2016
2015
Change
Net Production - BOE per day
  2,399 2,037 18%
Per BOE:        
     Average Sales Price   $ 35.13 $ 41.72 -16%
             
     Lease Operating Expenses   11.24 13.40 -16%
     Production Taxes   1.71 1.97 -13%
     DD&A   13.08 20.42 -36%
     Accretion   0.55 0.56 -2%
     General and Administrative Expenses   9.14 10.76 -15%

RING ENERGY, INC.
BALANCE SHEET
 
December 31,
2016
December 31,
2015
ASSETS
   
Current Assets
   
     Cash $ 71,086,381 $ 4,431,350
     Accounts receivable 3,453,238 2,507,858
     Joint interest billing receivable 454,461 1,629,165
     Prepaid expenses and retainers 226,835 146,118
     Total Current Assets 75,220,915 8,714,491
Property and Equipment    
     Oil and natural gas properties subject to amortization 250,133,965 269,590,374
     Inventory for property development 1,582,427
     Fixed assets subject to depreciation 1,549,311 1,539,991
        Total Property and Equipment 253,265,703 271,130,365
     Accumulated depreciation, depletion and amortization (41,347,152) (29,863,838)
     Net Property and Equipment 211,918,551 241,266,527
Deferred Income Taxes 20,051,908 64,323
Deferred Financing Costs 406,025 820,904
Total Assets $ 307,597,399 $ 250,866,245
     
LIABILITIES AND STOCKHOLDERS' EQUITY    
Current Liabilities    
     Accounts payable $ 9,099,391 $ 11,023,269
     Other accrued liabilities 309,898
     Total Current Liabilities 9,099,391 11,333,167
     
     Revolving line of credit 45,900,000
     Asset retirement obligation 7,957,035 7,401,950
     Total Liabilites 17,056,426 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
   
     49,113,063 shares and 30,391,942 shares
     outstanding, respectively
49,113 30,392
     Additional paid-in capital 335,197,845 193,269,034
     Retained Earnings (accumulated deficit) (44,705,985) (7,068,298)
     Total Stockholders' Equity 290,540,973 186,231,128
Total Liabilities and Stockholders' Equity $ 307,597,399 $ 250,866,245

RING ENERGY, INC.
STATEMENTS OF CASH FLOW
  December 31, December 31,
 
2016
2015
Cash Flows From Operating Activities
   
     Net Income (loss) ($37,637,687) ($9,052,771)
     Adjustments to reconcile net income (loss) to net cash
     provided by (used in) operating activities:
   
       Depreciation, depletion and amortization 11,483,314 15,175,791
       Ceiling test impairment 56,513,016 9,312,203
       Accretion expense 487,182 418,384
       Shared-based compensation 2,267,053 2,566,716
       Deferred income tax expense (benefit) (19,987,585) (5,003,713)
       Changes in assets and liabilities:    
       Accounts receivable 229,324 2,163,440
       Prepaid expenses 334,162 (806,422)
       Accounts payable (2,233,776) (4,929,884)
       Settlement of asset retirement obligation (240,606) (446,192)
Net Cash Provided by Operating Activities 11,214,397 9,397,552
Cash Flows from Investing Activities    
     Payments to purchase oil and natural gas properties (10,193,927) (77,902,553)
     Payments to develop oil and natural gas properties (26,554,171) (31,430,355)
     Purchase of inventory for development (1,582,427)
     Purchase of equipment, vehicles and leasehold improvements (9,320) (330,182)
     Net Cash Used in Investing Activities (38,339,845) (110,109,282)
Cash Flows from Financing Activities    
     Proceeds from issuance of notes payable 7,000,000 45,900,000
     Proceeds from issuance of common stock 139,567,980 50,039,853
     Principal payments on revolving line of credit (52,900,000)  
     Proceeds from option exercise 112,500 134,800
Net Cash Provided by Financing Activities 93,780,480 96,074,653
Net Increase (Decrease) in Cash 66,655,031 (4,190,885)
Cash at Beginning of Period 4,431,350 8,622,235
Cash at End of Period $ 71,086,381 $ 4,431,350
     
Supplemental Cash flow information    
     Cash paid for interest $ 649,010 $429,742
     
Non-Cash Investing and Financing Activities    
     Asset retirement obligation acquired 3,361,634
     Asset retirement obligation incurred during development 308,509 171,635
     
RECONCILIATION OF CASH FLOW FROM OPERATIONS
Net cash provided by operating activities $ 11,214,397 $ 9,397,552
Change in operating assets and liabilities (1,910,896) (4,019,058)
     
Cash flow from operations $ 13,125,293 $ 13,416,610
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
 
December 31,
2016
December 31,
2015
NET INCOME
($37,637,687) ($9,052,771)
     
     Net Interest expense 592,511 (6,984)
     Interest tax expense (benefit) (19,987,585) (5,003,713)
     Depreciation, depletion and amortization 11,483,314 15,175,791
     Accretion of discounted liabilities 487,182 418,384
     Ceiling test impairment 56,513,016 9,312,203
     Stock based compensation 2,267,053 2,566,716
     
ADJUSTED EBITDA $ 13,717,804 $ 14,158,760
     


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, its Form 10-Q for the quarter ended September 30, 2016 and 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 office
(602) 315-5926 mobile




 
  March 15, 2017

RING ENERGY, INC ANNOUNCES FINANCIAL AND OPERATIONAL RESULTS FOR FOURTH QUARTER AND YEAR END 2016
 
  February 23, 2017

RING ENERGY, INC., SCHEDULES CONFERENCE CALL ON ITS 2016 FOURTH QUARTER AND TWELVE MONTH FINANCIAL AND OPERATING RESULTS
 
  December 9, 2017

RING ENERGY, INC. ANNOUNCES COMPLETION OF PUBLIC OFFERING OF COMMON STOCK
 
 
 

 
   
   

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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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