Annual report pursuant to Section 13 and 15(d)

CONSOLIDATED STATEMENTS OF CASH FLOWS

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CONSOLIDATED STATEMENTS OF CASH FLOWS (USD $)
 12 Months Ended
Dec. 31, 2013
Dec. 31, 2012
Cash Flows From Operating Activities    
Net loss $ (452,209) $ (1,669,283)
Adjustments to reconcile net loss to net cash used in operating activities:    
Depreciation, depletion and amortization 2,284,091 506,786
Accretion expense 53,681 20,906
Share-based compensation 3,489,022 944,681
Stock issued as finders fee 100,000 0
Gain on derivative put options. 0 (276,736)
Provision for income taxes 77,701 (300,324)
Changes in assets and liabilities:    
Accounts receivable (3,470,437) (326,943)
Prepaid expenses (5,653) 87,845
Accounts payable 6,040,212 1,081,217
Accrued compensation 0 (100,000)
Net Cash Provided by (used in) Operating Activities 8,116,408 (31,851)
Cash Flows from Investing Activities    
Payments to purchase oil and natural gas properties (5,192,441) (3,684,674)
Payments to develop oil and natural gas properties (29,103,392) (6,532,898)
Purchase of office equipment (82,805) (159,977)
Plugging and abandonment cost incurred (60,544) 0
Net Cash Used in Investing Activities (34,439,182) (10,377,549)
Cash Flows From Financing Activities    
Proceeds from borrowings from Ring Energy, Inc. 0 1,150,000
Proceeds from issuance of common stock 73,201,690 13,009,062
Proceeds from option exercise 67,500 0
Proceeds from issuance of common stock to Ring Energy, Inc. Shareholders 0 10,887,561
Principal payments on revolving line of credit 0 (9,244,428)
Net Cash Provided by Financing Activities 73,269,190 15,802,195
Net Increase in Cash 46,946,416 5,392,795
Cash at Beginning of Period 5,404,167 11,372
Cash at End of Period 52,350,583 5,404,167
Supplemental Cash Flow Information    
Cash paid for interest 9,890 221,927
Noncash Investing and Financing Activities    
Oil and gas properties acquired 0 9,689,488
Deferred tax liability assumed (net) 0 (1,362,665)
Asset retirement obligation assumed 0 (152,148)
Revision of asset retirement obligation estimate 211,691 0
Asset retirement obligation incurred during development 481,296 (14,214)
Payments with Ring Energy, Inc. shares 0 (4,490,001)
Issuance of common stock to Ring Energy, Inc. shareholders 0 13,531,760
Accounts payable assumed 0 9,893
Less: Tax benefit 0 (436,391)
Less: Elimination of note payable to Ring Energy, Inc. 0 (2,003,122)
Less: Prepaid expenses acquired 0 (26,942)
Less: Property and equipment acquired 0 (187,637)
Proceeds from issuance of common stock to Ring Energy, Inc. Shareholders $ 0 $ 10,887,561