Press Release
  

FOR IMMEDIATE RELEASE
November 8, 2017 NYSE American: REI

RING ENERGY, INC. ANNOUNCES THIRD QUARTER AND NINE MONTH 2017 FINANCIAL
AND OPERATING RESULTS

Midland, TX. November 8, 2017 – Ring Energy, Inc. (NYSE American: REI) (“Ring”)(“Company”) announced today financial results for the three months and nine months ended September 30, 2017. For the three month period ended September 30, 2017, Ring had oil and gas revenues of $16,643,930, compared to $7,822,543 for the quarter ended September 30, 2016. For the nine month period ended September 30, 2017, the Company reported oil and gas revenues of $43,391,032, compared to oil and gas revenues of $21,019,540 for the nine month period ended September 30, 2016.

For the three months ended September 30, 2017, Ring reported net income of $3,073,760, or $0.06 per diluted share. For the nine months ended September 30, 2017, the Company reported net income of $6,263,804, or $0.12 per diluted share. This information compares to a net loss of $5,944,137, or $0.14 per fully diluted share for the three months ended September 30, 2016, which included a pre-tax non-cash impairment of $9,648,942. Excluding the impairment, the net gain per diluted share would have been $0.01. For the nine month period ended September 30, 2016, the Company reported a net loss of $37,160,681, or $1.00 per fully 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 $0.04.

For the three months ended September 30, 2017, oil sales volume increased to 346,900 barrels, compared to 174,707 barrels for the same period in 2016, a 98.5% increase, and gas sales volume decreased to 201,158 MCF (thousand cubic feet), compared to 229,456 MCF for the same period in 2016, a 12% decrease. For the nine months ended September 30, 2017, oil sales volume increased to 893,562 barrels, compared to 527,010 barrels for the same period in 2016, a 69.5% increase and gas sales volume decreased to 559,551 MCF, compared to 688,196 MCF for the same period in 2016, a 19% decrease.

The average commodity prices received by the Company were $46.17 per barrel of oil and $3.13 per MCF of natural gas for the quarter ended September 30, 2017, compared to $40.82 per barrel of oil and $3.01 per MCF of natural gas for the quarter ended September 30, 2016. The average prices received for the nine months ended September 30, 2017 were $46.56 per barrel of oil and $3.19 per MCF of natural gas, compared to $36.72 per barrel of oil and $2.42 per MCF of natural gas for the nine month period ended September 30, 2016.

Lease operating expenses, including production taxes, for the three months ended September 30, 2017 were $13.27 per barrel of oil equivalent (“BOE”), a 4% increase from the prior year. Depreciation, depletion and amortization costs, including accretion, increased 2.5% to $12.97 per BOE. General and administrative costs, which included a $959,715 charge for stock based compensation, were $6.23 per BOE, a 29% decrease. For the nine months ended September 30, 2017, lease operating expenses, including production taxes, were $12.71 per BOE, a 1% increase. Depreciation, depletion and amortization costs, including accretion, were $14.04 per BOE, a 1% increase, and general and administrative costs, which included a $2,763,007 charge for stock based compensation, were $7.68 per BOE, an 18% decrease from 2016.

Cash provided by operating activities, before changes in working capital, for the three and nine months ended September 30, 2017 was $10,270,367, or $0.19 per fully diluted share, and $26,283,307, or $0.51 per fully diluted share, compared to $3,687,847 and $8,077,511, or $0.09 and $0.22 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 nine months ended September 30, 2017 was $10,184,814, or $0.19 per fully diluted share, and $26,033,764, or $0.50 per fully diluted share, compared to $3,777,294 and $8,591,950, or $0.09 and $0.23 in 2016. (See accompanying table for a reconciliation of net income to adjusted EBITDA).

In July 2017, the Company announced it had completed a public offering of its common stock, receiving net proceeds of approximately $59.2 million, which included the exercise of the underwriter’s over-allotment. The proceeds from the offering are being used to fund the Company’s 2017 capital expenditure program and for other general corporate purposes.

In September 2017, the Company entered into two new hedging contracts in the form of “costless collars” (“hedge”) of WTI Crude Oil prices. The first hedge on 1,000 barrels of oil production per day became effective October 1, 2017 and will continue through December 31, 2017. The hedge has a floor of $49 and ceiling of $55.35. The second hedge, also on 1,000 barrels of oil production per day, becomes effective January 1, 2018 and continues through December 31, 2018. The hedge has a floor of $49 and a ceiling of $54.60. Management will continue to closely monitor market conditions and, if commodity prices continue to improve, consider additional hedging.

In October 2017, the Company entered into a third new hedging contract in the form of a “costless collar” (“hedge”) of WTI Crude Oil prices. The third hedge is also on 1,000 barrels of oil production per day and becomes effective January 1, 2018 and continues through December 31, 2018. The hedge has a floor of $51.00 and a ceiling of $54.80.

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

Ring’s Chief Executive Officer, Mr. Kelly Hoffman, stated, “The third quarter showed great results from our continued progress in cost containment and our accelerated drilling program. We contracted a second horizontal drilling rig in mid-August and are extremely excited with our initial results. We have continued making infrastructure improvements on our Central Basin Platform and Delaware Basin assets and now have secured a dedicated fracking crew that should keep our drilling program on track. In the third quarter we entered into two “hedging” contracts on a portion of our daily production that began the first of October and run through the end of 2018. In July, we completed a public stock offering with the proceeds to be used on our drilling and development program. We have a strong balance sheet, no debt, and with our dedicated staff will continue to look for opportunities that will benefit the Company and our shareholders.”

Non-GAAP Financial Measures:

Net income for the three months ended September 30, 2017 includes a non-cash charge for stock based compensation of $959,715. Excluding this item, the Company’s net earnings would have been $0.07 per diluted share. Net income for the nine months ended September 30, 2017 includes a non-cash charge for stock based compensation of $2,763,007. Excluding this item, the Company’s net income would have been $0.16 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
September 30,
Nine Months Ended
September 30,
 
2017
(Unaudited)
2016
(Unaudited)
2017
(Unaudited)
2016
(Unaudited)
Oil and Gas Revenues
$ 16,643,930 $ 7,822,543 $ 43,391,032 $ 21,019,540
         
Cost and Operating Expenses
       
     Oil and gas production costs 4,261,923 2,329,228 10,481,669 7,019,771
     Oil and gas production taxes 787,777 389,029 2,062,215 1,032,335
     Depreciation, depletion and amortization 4,823,044 2,568,153 13,433,489 8,541,981
     Ceiling test impairment 9,648,942 56,513,016
     Accretion expense 109,974 125,813 420,723 360,167
     General and administrative expense 2,369,131 1,882,579 7,576,391 6,023,038
         
     Total Costs and Operating Expenses 12,351,849 16,943,744 33,974,487 79,490,308
         
Income (Loss) from Operations 4,292,081 (9,121,201) 9,416,545 (58,470,768)
         
Other Income        
     Interest expense (95,864) (597,910)
     Interest income 85,553 6,417 249,543 83,470
     Gain on change in fair value of derivatives 65,828 65,828
         
     Net Other Income 151,381 (89,447) 315,371 (514,440)
         
Income (Loss) Before Tax Provision 4,443,462 (9,210,648) 9,731,916 (58,985,208)
         
(Provision for) Benefit From Income Taxes (1,369,702) 3,266,511 (3,468,112) 21,824,527
         
Net Income (Loss) $3,073,760 ($5,944,137) $6,263,804 ($37,160,681)
         
Basic Earnings (Loss) Per Common Share $0.06 ($0.14) $0.12 ($1.00)
Diluted Earnings (Loss) Per Common Share $0.06 ($0.14) $0.12 ($1.00)
       
Basic Weighted-Average Common Shares Outstanding 53,009,696 41,917,061 50,441,375 36,996,932
Diluted Weighted-Average Common Shares Outstanding 54,367,648 41,917,061 51,760,109 36,996,932
     

RING ENERGY, INC.
COMPARATIVE OPERATING STATISTICS
    Three Months Ended September 30,
    2017 2016 Change
Net Production - BOE per day
  4,135 2,315 79%
Per BOE:        
     Average Sales Price   $ 43.75 $ 36.73 19%
             
     Lease Operating Expenses   $ 11.20 $ 10.94 2%
     Production Taxes   $ 2.07 $ 1.83 13%
     DD&A   $ 12.68 $ 12.06 5%
     Accretion   $ 0.29 $ 0.59 -51%
     General and Administrative Expenses   $ 6.23 $ 8.84 -29%
    Nine Months Ended September 30,
    2017 2016 Change
Net Production - BOE per day
  3,615 2,342 54%
Per BOE:        
     Average Sales Price   $ 43.97 $ 32.76 34%
             
     Lease Operating Expenses   $ 10.62 $ 10.94 -3%
     Production Taxes   $ 2.09 $ 1.61 40%
     DD&A   $ 13.61 $ 13.31 2%
     Accretion   $ 0.43 $ 0.56 -23%
     General and Administrative Expenses   $ 7.68 $ 9.39 -18%

RING ENERGY, INC.
CONSOLIDATED BALANCE SHEET
 
September 30,
2017
December 31,
2016
ASSETS
   
Current Assets
   
     Cash $ 40,876,153 $ 71,086,381
     Accounts receivable 7,634,987 3,453,236
     Joint interest billing receivable 877,246 454,461
     Prepaid expenses and retainers 327,112 226,835
     Total Current Assets 49,715,498 75,220,915
Properties and Equipment    
     Oil and Natural Gas properties subject to amortization 373,837,454 250,133,965
     Inventory for property development 1,033,806 1,582,427
     Fixed assets subject to depreciation 1,858,528 1,549,311
        Total Property and Equipment 376,729,788 253,265,703
     Accumulated depreciation, depletion and amortization (54,780,641) (41,347,152)
     Net Property and Equipment 321,949,147 211,918,551
Deferred Income Taxes 18,180,259 20,051,908
Derivative Assets 65,828
Deferred Financing Costs 203,013 406,025
Total Assets $ 390,113,745 $307,597,399
     
LIABILITIES AND STOCKHOLDERS' EQUITY    
Current Liabilities    
     Accounts payable $ 21,225,911 $ 9,099,391
     Asset retirement obligations $ 414,000 7,957,035
     Total Current Liabilities 21,639,911 9,099,391
     
     Asset retirement obligations 8,205,194 7,957,035
     Total Liabilites 29,845,105 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
   
     54,145,901 shares and 49,113,063 shares
     outstanding, respectively
54,146 49,113
     Additional paid-in capital 397,060,212 335,197,845
     Retained Loss (36,845,718) (44,705,985)
     Total Stockholders' Equity 360,268,640 290,540,973
Total Liabilities and Stockholders' Equity $ 390,113,745 $ 307,597,399
     

RING ENERGY, INC.
STATEMENTS OF CASH FLOW
   
  Nine Months Ended
September 30,
 
2017
2016
Cash Flows From Operating Activities
   
     Net Income (loss) $ 6,263,804 ($37,160,681)
     Adjustments to reconcile net income to net cash used in operating activities:    
       Depreciation, depletion and amortization 13,433,489 8,541,981
       Ceiling test impairment 56,513,016
       Accretion expense 420,723 360,167
       Shared-based compensation 2,763,007 1,647,554
       Deferred income tax provision (benefit) 3,383,131 (21,824,526)
       Excess tax deficiency (benefit) related to shared-based compensation 84,981
       Change in fair value of derivative instruments (65,828)
     Changes in assets and liabilities:    
       Accounts receivable (4,604,534) 560,467
       Prepaid expenses and retainers 102,735 162,726
       Accounts payable 7,126,520 (3,897,613)
       Settlement of asset retirement obligation (605,432) (7,817)
Net Cash Provided by (Used in) Operating Activities 28,302,596 4,895,274
Cash Flows from Investing Activities    
     Payments to purchase oil and natural gas properties (26,915,783) (6,154,997)
     Payments to develop oil and natural gas properties (87,576,052) (16,190,471)
     Purchase of inventory for development (2,816,165)
     Purchase of equipment, vehicles and leasehold improvements (309,217) (9,320)
     Net Cash Used in Investing Activities (117,617,217) (22,362,605)
Cash Flows from Financing Activities    
     Proceeds from issuance of common stock 59,104,393 61,064,671
     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 59,104,393 15,277,171
Net Decrease in Cash (30,210,228) (2,182,343)
Cash at Beginning of Period 71,086,381 4,431,350
Cash at End of Period $ 40,876,153 $ 2,249,007
     
Supplemental Cash Flow Information    
     Cash paid for interest 564,640
     
Non-Cash Investing and Financing Activities    
     Asset retirement obligation incurred during development 846,868 248,487
     Use of inventory in property development 3,364,786
     Capitalized expenditures attributable to drilling projects
     financed through current liabilities
$5,000,000
     
RECONCILIATION OF CASH FLOW FROM OPERATIONS
Net cash provided by operating activities $ 28,302,596 $4,895,274
Change in operating assets and liabilities (2,019,289) 3,182,237
     
Cash flow from operations $ 26,283,307 $ 8,077,511
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
 
 
Nine Months Ended
September 30,
2017
September 30,
2016
NET INCOME
$ 6,263,804 ($37,160,681)
     
     Interest (Income) (249,543) (83,470)
     Interest expense 597,910
     Loss (Gain) on change in fair value of derivatives (65,828)
     Interest tax expense (benefit) 3,468,112 (21,824,527)
     Depreciation, depletion and amortization 13,433,489 8,541,981
     Accretion of discounted liabilities 420,723 360,167
     Ceiling test impairment 56,513,016
     Shared-based compensation 2,763,007 1,647,554
     
ADJUSTED EBITDA $ 26,033,764 $ 8,591,950
     


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 September 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


 
  November 8, 2017

RING ENERGY, INC. ANNOUNCES THIRD
QUARTER AND NINE MONTH 2017 FINANCIAL
AND OPERATING RESULTS
 
  October 30, 2017

RING ENERGY, INC., SCHEDULES CONFERENCE CALL ON ITS 2017 THIRD QUARTER AND NINE MONTH FINANCIAL AND OPERATING RESULTS
 
  October 5, 2017

RING ENERGY, INC. RELEASES THIRD QUARTER 2017 OPERATIONS UPDATE
 
  August 8, 2017

RING ENERGY, INC. ANNOUNCES SECOND QUARTER AND SIX MONTH 2017 FINANCIAL AND OPERATING RESULTS
 
  August 2, 2017

RING ENERGY, INC. ANNOUNCES REVISED
2017 CAPITAL EXPENDITURE DRILLING AND OPERATIONAL BUDGET
Company Announces Addition of 2nd Rig
in Mid-August
 
  July 24, 2017

RING ENERGY, INC., SCHEDULES CONFERENCE CALL ON ITS 2017 SECOND QUARTER AND SIX MONTH FINANCIAL AND OPERATING RESULTS
 
  July 21, 2017

RING ENERGY, INC. ANNOUNCES EXERCISE OF OVER-ALLOTMENT OPTION AND COMPLETION OF PUBLIC OFFERING OF COMMON STOCK
 
  July 18, 2017

RING ENERGY, INC. ANNOUNCES PRICING OF
PUBLIC OFFERING OF COMMON STOCK
 
  July 17, 2017

RING ENERGY, INC., ANNOUNCES COMMON STOCK OFFERING
 
  July 12, 2017

RING ENERGY, INC., RELEASES SECOND
QUARTER 2017 OPERATIONS UPDATE
Company Extends Contract of Drilling Rig
Through Year End 2017
 
  May 9, 2017

RING ENERGY, INC., ANNOUNCES FINANCIAL
AND OPERATING RESULTS FOR FIRST
QUARTER 2017
 
  May 3, 2017

RING ENERGY, INC., SCHEDULES CONFERENCE CALL ON ITS 2017 FIRST QUARTER FINANCIAL AND OPERATING RESULTS
 
  April 17, 2017

RING ENERGY, INC. ACQUIRES OVER 33,000 ACRES IN CENTRAL BASIN PLATFORM
 
  April 5, 2017

RING ENERGY, INC. RELEASES FIRST QUARTER 2017 OPERATIONS UPDATE
 
  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
 
 

January 9, 2017

RING ENERGY, INC. RELEASES FOURTH
QUARTER 2016 OPERATIONS UPDATE

 
 
 

 
   
   

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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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