Ring Energy, Inc. Announces Financial and Operating Results for First Quarter 2018

Download as PDF

Related Documents

MIDLAND, Texas--(BUSINESS WIRE)-- Ring Energy, Inc. (NYSE American: REI) (“Ring”) (“Company”) announced today financial results for the first quarter ended March 31, 2018. For the three month period ended March 31, 2018, Ring had oil and gas revenues of $29,891,391 compared to $12,243,793 for the quarter ended March 31, 2017, and net income of $5,665,634, or $0.10 per diluted share, compared to net income of $1,279,281, or $0.03 per diluted share.

For the three months ended March 31, 2018, the net income included a pre-tax “Unrealized Loss on Derivatives” of $790,701. Excluding this item, the net income per diluted share would have been $0.11.

For the three months ended March 31, 2018, oil sales volume increased to 479,864 barrels, compared to 240,260 barrels for the same period in 2017, an 99.7% increase, and gas sales volume increased to 210,031 MCF (thousand cubic feet), compared to 168,349 MCF for the same period in 2017, a 24.7% increase. On a barrel of oil equivalent (“BOE”) basis for the three months ended March 31, 2018, production sales increased to 514,869 BOEs, compared to 268,318 BOEs for the same period in 2017, a 91.9% increase. The average commodity prices received by Ring were $60.73 per barrel of oil and $3.58 per MCF of natural gas for the quarter ended March 31, 2018, compared to $48.69 per barrel of oil and $3.25 per MCF of natural gas for the quarter ended March 31, 2017.

Lease operating expenses, including production taxes, for the three months ended March 31, 2018 were $14.00 per BOE, a 14% increase from the prior year. Depreciation, depletion and amortization costs, including accretion, increased 25% to $16.82 per BOE. General and administrative costs, which included a $1,081,199 charge for stock based compensation, were $5.99 per BOE, a 43% decrease.

Cash provided by operating activities, before changes in working capital, for the three months ended March 31, 2018 was $19,168,262 or $0.33 per fully diluted share, compared to $7,221,936, or $0.14 per fully diluted share for the same period in 2017. Earnings before interest, taxes, depletion and other non-cash items (“Adjusted EBITDA”) for the three months ended March 31, 2018 was $19,203,791, or $0.33 per fully diluted share, compared to $7,105,257, or $0.14 per fully diluted share for the same period in 2017. (See accompanying table for a reconciliation of net income to adjusted EBITDA).

In February 2018, the Company closed on an underwritten public stock offering of 6,164,000 shares of its common stock, including 804,000 shares sold pursuant to the full exercise of an over-allotment option, at $14.00 per share for gross proceeds of $86,296,000. Total net proceeds from the offering were $81,822,066 after deducting underwriting commissions and offering expenses.

There was no outstanding debt on the Company’s $500 million senior secured credit facility at March 31, 2018.

Ring’s Chief Executive Officer, Mr. Kelly Hoffman, stated, “Our first quarter results have gotten the Company off to a great start for 2018. We continue to have excellent results from our horizontal drilling program. We have 60 wells scheduled to be drilled this year and look forward to continued exceptional results. Our new gas pipeline is completed, and now, instead of having to flare the gas associated with our horizontal drilling, we are selling it. This, along with added saltwater disposal wells and the restimulation of some of our older wells, is only adding to our momentum. The North Gaines and Brushy Canyon wells are on track with encouraging results that will be released in the near future. Our goal of being cash flow positive by year end is on track. Our dedicated staff continues to search for and evaluate complementary, accretive properties and opportunities that will build on our success. With the completion of our stock offering in February, we have strengthened an already strong balance sheet. We look forward to the rest of 2018 and couldn’t be more excited for Ring and its shareholders.”

Non-GAAP Financial Measures:

Net income for the three months ended March 31, 2018 includes a non-cash charge for stock based compensation of $1,081,199. Excluding this item, the Company’s net income would have been $0.11 per diluted share for the three months ended March 31, 2018. The Company believes results excluding this item 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.

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, 2017, its Form 10-Q for the quarter ended March 31, 2018 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

March 31,

2018 2017

(Unaudited)

(Unaudited)

 
Oil and Gas Revenues $ 29,891,391     $ 12,243,793  
 
Costs and Operating Expenses
Oil and gas production costs 5,781,910 2,705,371
Oil and gas production taxes 1,425,882 583,264
Depreciation, depletion and amortization 8,501,379 3,474,019
Asset retirement obligation accretion 161,120 137,176
General and administrative expense   3,085,980       2,841,111  
 
Total Costs and Operating Expenses   18,956,271       9,740,941  
 
Income from Operations   10,935,120       2,502,852  
 
Other Income (Expense)
Interest income 8,953 116,679
Interest expense (44,483 ) -
Realized loss on derivatives (1,475,026 ) -
Unrealized loss on change in fair value of derivatives   (790,701 )     -  
 
Net Other Income (Expense)   (2,301,257 )     116,679  
 
Income before tax provision 8,633,863 2,619,531
 
Provision for Income Taxes   (2,968,229 )     (1,340,250 )
 
Net Income $ 5,665,634     $ 1,279,281  
 
Basic Income Per Common Share $ 0.10 $ 0.03
Diluted Income Per Common Share $ 0.10 $ 0.03
 
 
Basic Weighted-Average Common Shares Outstanding 56,415,673 49,114,731
Diluted Weighted-Average Common Shares Outstanding 57,949,389 50,414,435
 
           
COMPARATIVE OPERATING STATISTICS
 
Three Months Ended March 31,
2018 2017 Change
 
Net Production - BOE per day 5,721 2,981 92 %
Per BOE:

Average Sales Price

$58.06

$45.63

27 %
 
Lease Operating Expenses 11.23 10.08 11 %
Production Taxes 2.77 2.17 28 %
DD&A 16.51 12.95 27 %
Accretion 0.31 0.51 -39 %
General & Administrative Expenses 5.99 10.59 -43 %
 
 
RING ENERGY, INC.
CONSOLIDATED BALANCE SHEET
 
March 31,

 

December 31,

2018

2017

 
ASSETS
Current Assets
Cash $47,036,101 $15,006,581
Accounts receivable 13,447,211 12,833,883
Joint interest billing receivable 636,336 1,054,022
Prepaid expenses and retainers

131,027

229,438
Total Current Assets 61,250,675 29,123,924
Properties and Equipment
Oil and natural gas properties subject to depletion and amortization 483,115,061 433,591,134
Fixed assets subject to depreciation 1,848,405 1,884,818
Total Property and Equipment 484,963,466 435,475,952
Accumulated depreciation, depletion and amortization (70,344,636) (61,864,932)
Net Property and Equipment 414,618,830 373,611,020
Deferred Income Taxes 8,263,971 11,232,200

Deferred Financing Costs

67,671 135,342
Total Assets $484,201,147 $414,102,486
 
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Accounts payable $24,822,069 $44,475,163
Derivative Liabilities $4,758,987 $3,968,286
Total Current Liabilities 29,581,056 48,443,449
 
Asset retirement obligations 9,447,852 9,055,697
Total Liabilities 39,028,908 57,499,146

 

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; 60,388,029 shares and 54,224,029 shares outstanding, respectively

 

60,388 54,224
Additional paid-in capital 480,801,870 397,904,769
Accumulated deficit (35,690,019) (41,355,653)
Total Stockholders' Equity 445,172,239 356,603,340
Total Liabilities and Stockholders' Equity $484,201,147 $414,102,486
     
RING ENERGY, INC.
STATEMENTS OF CASH FLOW
 
Three Months Ended
March 31,

2018

2017

 
Cash Flows From Operating Activities
Net income $ 5,665,634 $ 1,279,281

Adjustments to reconcile net income to net cash used in operating activities:

Depreciation, depletion and amortization 8,501,379 3,474,019
Accretion expense 161,120 137,176
Share-based compensation 1,081,199 991,210
Deferred income tax provision 1,809,625 923,390
Excess tax deficiency related to share-based compensation 1,158,604 416,860
Change in fair value of derivative instruments 790,701 -
Changes in assets and liabilities:
Accounts receivable (195,642 ) (1,119,947 )
Prepaid expenses and retainers 166,082 161,693
Accounts payable (32,653,094 ) 4,761,819
Settlement of asset retirement obligation   (149,772 )       (8,929 )
Net Cash Provided by (Used in) Operating Activities   (13,664,164 )       11,016,572  
Cash Flows from Investing Activities
Payments to purchase oil and natural gas properties (1,061,195 ) (3,924,404 )
Payments to develop oil and natural gas properties (35,081,925 ) (19,796,719 )
Disposal of fixed assets subject to depreciation 14,738 -
Purchase of inventory for development   -         (2,816,165 )
Net Cash Used in Investing Activities   (36,128,382 )       (26,537,288 )
Cash Flows From Financing Activities
Amounts paid for registration statement for future offerings - (147,537 )
Proceeds from issuance of common stock, net of offering costs   81,822,066         -  
Net Cash Provided by (Used in) Financing Activities   81,822,066         (147,537 )
Net Decrease in Cash 32,029,520 (15,668,253 )
Cash at Beginning of Period   15,006,581         71,086,381  
Cash at End of Period $ 47,036,101       $ 55,418,128  
Supplemental Cash Flow Information
Cash paid for interest $ 44,483         -  
Noncash Investing and Financing Activities
Asset retirement obligation incurred during development $ 380,807 $ 244,372
Use of inventory in property development - $ 687,443

Capitalized expenditures attributable to drilling projects financed through current liabilities

$ 13,000,000 $ 4,700,000
 
RECONCILIATION OF CASH FLOW FROM OPERATIONS
 
Net cash provided by operating activities ($13,664,164 ) $ 11,016,572
Change in operating assets and liabilities   32,832,426         (3,794,636 )
 
Cash flow from operations $ 19,168,262       $ 7,221,936  
 
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
 
March 31, March 31,

2018

2017

 
NET INCOME (LOSS) $ 5,665,634 $ 1,279,281
 
Interest (income) (8,953 ) (116,679 )
Interest expense 44,483 -
Income tax expense (benefit) 1,809,625 923,390
Excess tax benefits related to share-based compensation 1,158,604 416,860
Depreciation, depletion and amortization 8,501,379 3,474,019
Accretion of discounted liabilities 161,120 137,176
Share-based compensation 1,081,199 991,210
Change in fair value of derivative instruments   790,701     -  
 
ADJUSTED EBITDA $ 19,203,792   $ 7,105,257  

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

Source: Ring Energy, Inc.

Released May 8, 2018