Exhibit 99.1

 

FOR IMMEDIATE RELEASE  
May 11, 2020  NYSE American – REI

 

RING ENERGY ANNOUNCES FIRST QUARTER 2020

FINANCIAL AND OPERATIONAL RESULTS

 

Midland, TX. May11, 2020 - Ring Energy, Inc. (NYSEAM: REI) (“Ring”) (“Company”) announced today financial results for the three months ended March 31, 2020. For the three-month period ended March 31, 2020, the Company reported oil and gas revenues of $39,570,328 compared to revenues of $41,798,315 for the quarter ended March 31, 2019.

 

For the three months ended March 31, 2020, Ring reported net income of $43,804,118, or $0.64 per diluted share, compared to net income of $4,269,260, or $0.07 per fully diluted share for the three months ended March 31, 2019.

 

For the three months ended March 31, 2020, the net income included a pre-tax unrealized gain on derivatives of $47,086,681 and a non-cash charge for stock-based compensation of $673,795. Excluding these items, the net income per diluted share would have been $0.11. 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.

 

For the three months ended March 31, 2020, oil sales volume increased to 855,603 barrels, compared to 812,565 barrels (Included Wishbone Assets as of 2/1/19) for the same period in 2019, a 5.3% increase, and gas sales volume increased to 765,551 MCF (thousand cubic feet), compared to 396,264 MCF (Included Wishbone Assets as of 2/1/19) for the same period in 2019, a 93.2% increase. On a barrel of oil equivalent (“BOE”) basis for the three months ended March 31, 2020, production sales were 983,195 BOEs, compared to 878,609 BOEs (Included Wishbone Assets as of 2/1/19) for the same period in 2019, an 11.9% increase, and 1,053,234 BOEs for the fourth quarter of 2019, a 6.6% decrease.

 

The average commodity prices received by the Company were $45.16 per barrel of oil and $1.22 per MCF of natural gas for the quarter ended March 31, 2020, compared to $50.31 per barrel of oil and $2.32 per MCF of natural gas for the quarter ended March 31, 2019. On a BOE basis for the three-month period ended March 31, 2020, the average price received was $40.25, compared to $47.57 per BOE for the three months ended March 31, 2019.

 

The average price differential the Company experienced from WTI pricing in the first quarter 2020 was approximately $2.00.

 

Management reviewed the derivative contracts (“Hedges”) it currently has in place for 2020 in the form of costless collars of NYMEX WTI Crude Oil, with an offsetting put option (“floor”) and call option (“ceiling”). The contracts are for a total of 5,500 barrels of oil per day for the period of January 2020 through December 2020. The costless collar pricing does not take into account any pricing differentials between NYMEX WTI pricing and the price received by the Company.

 

BOPD  Put Price  Call Price
1,000  $50.00  $65.83
1,000  $50.00  $65.40
1,000  $50.00  $58.40
1,000  $50.00  $58.25
1,500  $50.00  $58.65

 

 

 

 

The Company has also entered into derivative contracts for 2021 in the form of costless collars of NYMEX WTI Crude oil. The contracts are for a total of 4,500 barrels of oil per day for the period of January 2021 through December 2021. Again, the costless collar pricing does not take into account any pricing differentials between NYMEX WTI pricing and the price received by the Company.

 

BOPD  Put Price  Call Price
1,000  $45.00  $54.75
1,000  $45.00  $52.71
1,000  $40.00  $55.08
1,500  $40.00  $55.35

 

Management restated that the Company’s “costless collars” are derivative financial contracts. While the Company enters into these contracts to protect its cash flow from operations, and the volumes it hedges are based on its anticipated production volumes, there is no requirement for the actual production to match the volumes it has hedged. Management may reduce production to a level that is below the volumes that are currently hedged and still receive a net payment equal to the difference between the hedged price and the average NYSE WTI price for the preceding month on the total amount hedged. As the NYSE WTI indexed price decreases, the amount the Company receives on its hedges increases.

 

Lease operating expenses (“LOE”), including production taxes, for the three months ended March 31, 2020 were $12.45 per BOE, equaling 30.9% of the quarter’s revenue and a 4.8% decrease from same period in 2019. Depreciation, depletion and amortization costs, including accretion, increased 5.8% to $14.15 per BOE from the first quarter 2019 and equaled 35.2% of the first quarter 2020 revenue. General and administrative costs, which included a $673,795 charge for stock-based compensation and $289,051 for an operating lease expense, were $3.38 per BOE, a 57.1% decrease from the first quarter 2019 and equaled 8.3% of the first quarter 2020 revenue.

 

Cash provided by operating activities, before changes in working capital, for the three months ended March 31, 2020 was $23,945,189, or $0.35 per fully diluted share, compared to $23,454,168, or $0.37 per fully diluted share for the same period in 2019. Earnings before interest, taxes, depletion and other non-cash items (“Adjusted EBITDA”) for the three months ended March 31, 2020 was $28,004,599, or $0.41 per fully diluted share, compared to $24,214,949, or $0.38 in 2019. (See accompanying table for a reconciliation of net income to adjusted EBITDA).

 

Total capital expenditures for the three months ended March 31, 2020 were approximately $16.0 million.

 

As of March 31, 2020, the outstanding balance on the Company’s $1 billion senior credit facility was $366.5 million. The weighted average interest rate on borrowings under the senior credit facility as of March 31, 2020 was 3.72%. The redetermination evaluation scheduled for May 2020 is currently in process.

 

On April 13, 2020, the Company drew $21.5 million on the Credit Facility, increasing the outstanding total to $388 million. Mr. Randy Broaddrick, Vice President and Chief Financial Officer, commented, “In mid-April, we drew down an additional $21.5 million to take advantage of discounts being offered by a number of our suppliers and vendors regarding payment of their invoices. To date, we have saved the Company over $2 million.”

 

On April 14, 2020, the Company announced it had entered into a Purchase and Sale Agreement on its Delaware Basin acreage. The sales price is $31.5 million. The Company has received a $500,000 non-refundable deposit and expects the transaction to close in approximately 30 - 45 days.

 

 

 

 

The Company’s Chief Executive Officer, Mr. Kelly Hoffman, stated, “The first quarter has been a challenging time for all oil companies. Prior to suspending all drilling operations in early March, the Company had drilled four new San Andres horizontal wells and completed two additional wells on its Northwest Shelf property. The four wells drilled in the first quarter continued to exceed our expectations with average IP rates over 600 BOE per day. All of our operations were performed on time and within budget. After attaining our primary goal of becoming cash flow positive by year end 2019, we continued it in the 1st quarter, being cash flow positive by approximately $7.9 million. As oil prices continued to drop and the differentials between spot prices and well head prices grew, management began cutting costs and conserving cash. In the absence of any additional drilling, we have made additional cuts to our capital expenditure budget (“CAPEX”) for 2020 and estimate it to be between $25-$27 million. With the hedges we have in place and the cost-cutting measures we have made to date, we are confident that Ring will come through these turbulent times and emerge postured to become a better and stronger company than before. We remain focused on the importance of strengthening our balance sheet. We announced we had entered into an agreement to sell our Delaware property and will use those proceeds to reduce our long term debt. Our core assets in the Northwest Shelf and Central Basin Platform offer us years of development and growth. We stand ready to resume drilling activity once we see stability in the marketplace return, and if that should occur, we will keep everyone posted.”

 

About Ring Energy, Inc.

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

www.ringenergy.com

 

Safe Harbor Statement

This release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Forward-looking statements involve a wide variety of risks and uncertainties, and include, 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, 2019, its Form 10Q for the quarter ended March 31, 2020 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.

STATEMENTS OF OPERATIONS

 

   Three Months Ended 
   March 31, 
   2020   2019 
   (Unaudited)   Unaudited) 
         
Oil and Gas Revenues  $39,570,328   $41,798,315 
           
Costs and Operating Expenses          
      Oil and gas production costs   10,378,461    9,408,764 
      Oil and gas production taxes   1,870,245    2,082,875 
      Depreciation, depletion and amortization   13,682,996    12,929,054 
      Asset retirement obligation accretion   231,962    215,945 
      Lease expense   289,051    128,175 
      General and administrative expense   3,035,895    6,798,017 
           
         Total Costs and Operating Expenses   29,488,610    31,562,830 
           
Income (Loss) from Operations   10,081,718    10,235,485 
           
Other Income (Expense)          
      Interest income   5    12,236 
      Interest expense   (4,248,498)   (773,017)
      Realized gain on derivatives   3,334,128    - 
        Unrealized gain (loss)on change in fair value of derivatives   47,086,681    (340,685)
           
            Net Other Income (Expense)   46,172,316    (1,101,466)
           
Income Before Provision for Income Taxes   56,254,034    9,134,019 
           
(Provision for) Income Taxes   (12,449,916)   (4,864,759)
           
Net Income (Loss)  $43,804,118   $4,269,260 
           
Basic Earnings (Loss) Per Common Share  $0.64   $0.07 
Diluted Earnings (Loss) Per Common Share  $0.64   $0.07 
           
Basic Weighted-Average Common Shares Outstanding   67,993,797    63,229,710 
Diluted Weighted-Average Common Shares Outstanding   67,997,092    63,992,549 

 

 

 

 

COMPARATIVE OPERATING STATISTICS

 

   Three Months Ended March 31, 
   2020   2019   Change   % of 1st Qrt. 2020 Revenue 
                 
Net Sales - BOE per day   10,804    9,762    10.7%      
Per BOE:                    
Average Sales Price  $40.25   $47.57    -15.4%      
                     
Oil and Gas Production Costs   10.55    10.71    -1.5%    26,2% 
Production Taxes   1.90    2.37    -19.8%    4.7% 
DD&A   13.92    14.72    -5.4%    34.6% 
Accretion   0.24    0.25    -4.0%    0.6% 
General & Administrative Expenses   3.09    7.74    -60.0%    7.6% 
Lease Expense   0.29    0.15    93.3%    0.7% 

 

 

 

 

 

 

 

RING ENERGY, INC.
BALANCE SHEET

 

   March 31,   December 31, 
   2020   2019 
         
ASSETS          
Current Assets          
     Cash  $12,531,388   $10,004,622 
     Accounts receivable   12,027,477    22,909,195 
     Joint interest billing receivable   2,444,702    1,812,469 
     Derivative receivable   3,334,128    - 
     Derivative asset   34,056,600      
     Prepaid expenses and retainers   397,802    3,982,255 
     Total Current Assets   64,792,097    38,708,541 
Property and Equipment          
     Oil and natural gas properties subject to amortization   1,100,005,708    1,083,966,135 
     Financing lease asset subject to depreciation   858,513    858,513 
     Fixed assets subject to depreciation   1,465,551    1,465,551 
     Total Property and Equipment   1,102,329,772    1,086,290,199 
     Accumulated depreciation, depletion and amortization   (170,757,041)   (157,074,044)
     Net Property and Equipment   931,572,731    929,216,155 
Operating lease asset   1,577,993    1,867,044 
Derivative asset   10,030,002    - 
Deferred Financing Costs   3,025,326    3,214,408 
Total Assets  $1,010,998,149   $973,006,148 
           
LIABILITIES AND STOCKHOLDERS' EQUITY          
Current Liabilities          
     Accounts payable  $39,051,572   $54,635,602 
     Financing lease liability   284,630   $280,970 
     Operating lease liability  $1,056,690   $1,175,904 
     Derivative liabilities   -    3,000,078 
     Total Current Liabilities   40,392,892    59,092,554 
           
     Deferred income taxes   18,451,092    6,001,176 
     Revolving line of credit   366,500,000    366,500,000 
     Financing lease liability, less current portion   352,660    424,126 
     Operating lease liability, less current portion   521,303    691,140 
     Asset retirement obligations   16,792,356    16,787,219 
     Total Liabilities   443,010,303    449,496,215 
           
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;          
        67,993,797 shares and 67,993,797 shares          
        issued and outstanding, respectively   67,994    67,994 
     Additional paid-in capital   526,975,076    526,301,281 
     Accumulated deficit   40,944,776    (2,859,342)
     Total Stockholders' Equity   567,987,846    523,509,933 
Total Liabilities and Stockholders' Equity  $1,010,998,149   $973,006,148 

 

 

 

 

RING ENERGY, INC.
STATEMENTS OF CASH FLOW

 

   Three Months Ended 
   March 31,   March 31, 
   2020   2019 
         
Cash Flows From Operating Activities          
      Net income (loss)  $43,804,118   $4,269,260 
      Adjustments to reconcile net income (loss) to net cash          
          Provided by operating activities:          
             Depreciation, depletion and amortization   13,682,996    12,929,054 
             Accretion expense   231,962    215,945 
             Amortization of deferred financing costs   189,082    - 
             Share-based compensation   673,795    834,465 
             Deferred income tax provision   12,028,380    1,918,144 
             Excess tax deficiency related to share-based compensation   421,536    2,946,615 
             Change in fair value of derivative instruments   (47,086,680)   340,685 
          Changes in assets and liabilities:          
             Accounts receivable   6,915,357    (15,808,739)
             Prepaid expenses and retainers   3,584,453    180,452 
             Accounts payable   (6,614,029)   2,111,804 
             Settlement of asset retirement obligation   (293,212)   (107,770)
      Net Cash Provided by Operating Activities   27,537,758    9,829,915 
Cash Flows from Investing Activities          
      Payments to purchase oil and natural gas properties   (480,048)   (13,358,132)
      Payments to develop oil and natural gas properties   (24,463,138)   (42,228,740)
      Net Cash Used in Investing Activities   (24,943,186)   (55,586,872)
Cash Flows From Financing Activities          
      Proceeds from revolving line of credit   -    45,000,000 
      Reduction of financing lease liabilities   (67,806)   - 
      Net Cash Provided by Financing Activities   (67,806)   45,000,000 
Net Change in Cash   2,526,766    (756,957)
Cash at Beginning of Period   10,004,622    3,363,726 
Cash at End of Period  $12,531,388   $2,606,769 
Supplemental Cash flow Information          
    Cash paid for interest  $4,211,754   $708,951 
           
Noncash Investing and Financing Activities          
    Asset retirement obligation incurred during development   66,387    175,173 
    Capitalized expenditures attributable to drilling projects          
        financed through current liabilities   6,200,000    34,605,000 
    Acquisition of oil and gas properties          
       Assumption of joint interest billing receivable   -    1,464,394 
       Assumption of prepaid assets   -    2,864,554 
       Assumption of accounts and revenue payables   -    (1,234,862)
       Asset retirement obligation incurred through acquisition   -    (2,979,645)
       Acquisition payable to be settled through equity   -    (28,356,396)
       Acquisition payable to be settled through cash payment   -    (256,877,766)
       Oil and gas properties subject to amortization   -    285,119,721 
           
RECONCILIATION OF CASH FLOW FROM OPERATIONS
           
Net cash provided by operating activities  $27,537,758   $9,829,915 
Change in operating assets and liabilities   (3,592,569)   13,624,253 
           
Cash flow from operations  $23,945,189   $23,454,168 

 

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

 

   Three Months Ended 
   March 31,   March 31, 
   2020   2019 
         
NET INCOME  $43,804,118   $4,269,260 
           
     Net other (income) expense   (46,172,316)   1,101,466 
     Realized (gain) on derivatives   3,334,128    - 
     Income tax expense   12,449,916    4,864,759 
     Depreciation, depletion and amortization   13,682,996    12,929,054 
     Accretion of discounted liabilities   231,962    215,945 
     Stock based compensation   673,795    834,465 
           
ADJUSTED EBITDA  $28,004,599   $24,214,949