Exhibit 99.2

  

RING ENERGY, INC.
UNAUDITED PRO FORMA CONDENSED BALANCE SHEET
AS OF MARCH 31, 2015
             
   Ring   Properties     
   Historical   Acquired   Pro Forma 
ASSETS               
Current Assets               
Cash  $2,850,125   $-   $2,850,125 
Accounts receivable   2,853,940    -    2,853,940 
Joint interest billing receivable   3,001,085    -    3,001,085 
Prepaid expenses and retainers   149,731    -    149,731 
Total Current Assets   8,854,881    -    8,854,881 
Properties and Equipment               
Oil and natural gas properties subject to amortization   175,689,596    77,419,087(1)   253,108,683 
Fixed assets subject to depreciation   1,374,213         1,374,213 
Total Properties and Equipment   177,063,809    77,419,087    254,482,896 
Accumulated depreciation, depletion and amortization   (18,342,345)        (18,342,345)
Net Properties and Equipment   158,721,464    77,419,087    236,140,551 
Total Assets  $167,576,345   $77,419,087   $244,995,432 
                
LIABILITIES AND STOCKHOLDERS' EQUITY               
Current Liabilities               
Accounts payable  $6,930,803   $-    6,930,803 
Other accured liabilities   -    -    - 
Total Current Liabilities   6,930,803    -    6,930,803 
                
Deferred income taxes   4,366,405    -    4,366,405 
Long term debt   10,000,000    75,000,000(1)   85,000,000 
Asset retirement obligation   3,995,043    2,419,087(1)   6,414,130 
Total Liabilities   25,292,251    77,419,087    102,711,338 
Stockholders' Equity               
Common stock   25,767    -    25,767 
Additional paid-in capital   141,249,478    -    141,249,478 
Retained earnings   1,008,849    -    1,008,849 
Total Stockholders' Equity   142,284,094    -    142,284,094 
Total Liabilities and Stockholders' Equity  $167,576,345   $77,419,087   $244,995,432 

 

 
 

 

RING ENERGY, INC.
UNAUDITED PRO FORMA CONDENSED STATEMENT OF OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 31, 2015
         
   Ring   Properties   Pro Forma     
   Historical   Acquired   Adjustments   Pro Forma 
                 
Oil and Gas Revenues  $6,045,701   $3,845,955   $-   $9,891,656 
                     
Costs and Operating Expenses                    
Oil and gas production costs   1,867,795    1,841,229    -    3,709,024 
Oil and gas production taxes   277,031    185,158    -    462,189 
Depreciation, depletion and amortization   3,654,298    -    1,694,814 (2)  5,349,112 
Asset retirement obligation accretion   66,979    -    38,867 (3)  105,846 
General and administrative expense   1,728,987    -    -    1,728,987 
                     
Total Costs and Operating Expenses   7,595,090    2,026,387    1,733,681    11,355,158 
                     
Income (Loss) from Operations   (1,549,389)   1,819,568    (1,733,681)   (1,463,502)
                     
Other Income (Expense)                    
Interest income   780    -    -    780 
Interest expense   -    -    (535,969)(4)  (535,969)
                     
Net Other Income   780    -    (535,969)   (535,189)
                     
Income (Loss) Before Provision for Income Taxes   (1,548,609)   1,819,568    (2,269,650)   (1,998,691)
                     
(Provision for) Benefit from Income Taxes   572,985    -    166,530 (5)  739,515 
                     
Net Income (Loss)  $(975,624)  $1,819,568   $(2,103,120)  $(1,259,176)

 

 
 

 

RING ENERGY, INC.
UNAUDITED PRO FORMA CONDENSED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 2014
         
   Ring   Properties   Pro Forma     
   Historical   Acquired   Adjustments   Pro Forma 
                 
Oil and Gas Revenues  $38,089,443   $36,213,799   $-   $74,303,242 
                     
Costs and Operating Expenses                    
Oil and gas production costs   4,993,166    11,538,887    -    16,532,053 
Oil and gas production taxes   1,760,206    1,754,009    -    3,514,215 
Depreciation, depletion and amortization   11,807,794    -    6,753,883 (2)  18,561,677 
Asset retirement obligation accretion   154,973    -    129,395 (3)  284,368 
General and administrative expense   6,803,029    -    -    6,803,029 
                     
Total Costs and Operating Expenses   25,519,168    13,292,896    6,883,278    45,695,342 
                     
Income (Loss) from Operations   12,570,275    22,920,903    (6,883,278)   28,607,900 
                     
Other Income (Expense)                    
Interest income   85,964    -    -    85,964 
Interest expense   -    -    (2,121,394)(4) $(2,121,394)
                     
Net Other Income   85,964    -    (2,121,394)   (2,035,430)
                     
Income (Loss) Before Provision for Income Taxes   12,656,239    22,920,903    (9,004,672)   26,572,470 
                     
(Provision for) Benefit from Income Taxes   (4,235,739)   -    (5,149,005)(5) $(9,384,744)
                     
Net Income (Loss)  $8,420,500   $22,920,903   $(14,153,677)  $17,187,726 

 

 
 

    

On May 21, 2015, Ring Energy, Inc. (“Ring”) entered into a purchase and sale agreement (the “Purchase Agreement”) with Finley Production Co., LP, BDT Oil & Gas, LP, Metcalfe Oil, LP, Grasslands Energy LP, Buffalo Oil & Gas, LP and Finley Resources, Inc., as sellers (collectively, “Sellers”), to acquire oil and gas assets (the “Acquisition”). The assets to be acquired by Ring under the Purchase Agreement consist of oil and gas assets and properties, which are located in the Ford West Field and Ford Geraldine Unit in Reeves and Culberson Counties, in the State of Texas. Under the terms of the Purchase Agreement, Ring agreed to acquire the oil and gas assets from Sellers for a purchase price of $75,000,000, subject to customary purchase price adjustments based on, among other things, environmental and title defects, if any.

 

The Acquisition will qualify as a business combination and as such, Ring will recognize the assets to be acquired and liabilities to be assumed at their fair values as the date of closing. The estimated fair value of the properties to be acquired approximate the value of consideration to be paid and the asset retirement obligation to be assumed, which management has concluded approximates the fair value that would be paid by a typical market participant. As a result, neither goodwill nor a bargain purchase gain will be recognized related to the acquisition. While the proposed transaction is subject to purchase price adjustments, the following table summarizes estimates of the assets to be acquired and the liabilities to be assumed:

 

Oil and gas properties  $77,419,087 
Asset retirement obligation   (2,419,087)
Total Identifiable Net Assets  $75,000,000 

 

Pro forma adjustments to the historical financial statements to reflect the acquisition of the Finley properties are as follows:

 

(1)To record the acquisition transaction. The consideration to be paid and liabilities to be assumed consist of the following:

 

(a)A cash payment of $75,000,000 drawn from our credit facility.

 

(b)The assumption of the asset retirement obligation of $2,419,087. The obligation relates to legal obligations associated with the retirement of long-lived assets that result from the acquisitions, construction, development or normal use of the asset. The obligation relates primarily to the requirement to plug and abandon oil and natural gas wells and support wells at the conclusion of their useful lives.

 

(2)To record amortization of the oil and gas properties acquired based on the oil and gas production occurring during the periods.

 

(3)To record accretion of the asset retirement obligation.

 

(4)To record interest expense amount drawn on the credit facility to complete the transaction.

 

(5)To record the pro forma income tax impact of the acquired properties.

 

Note: The Company continues to evaluate the capital markets and will finance the Acquisition with either its revolving credit facility or a capital markets transaction, subject to market conditions and other factors.