Ring Energy Announces Financial and Operational Results for Fourth Quarter and Year End 2015
MIDLAND, Texas--(BUSINESS WIRE)-- Ring Energy, Inc. (NYSE MKT: REI) (“Ring”)(“Company”) announced today financial results for the fourth quarter and year ended December 31, 2015.
For the fourth quarter of 2015, Ring reported revenues of $7,362,394, as compared to revenues of $9,984,982 for the fourth quarter of 2014. For the year ended December 31, 2015, the Company reported revenues of $31,013,892, as compared to $38,089,443 for the year ended December 31, 2014. For the fourth quarter of 2015, Ring reported a net loss of $7,473,046, or $0.25 per diluted share, which included a pre-tax non-cash impairment of $9,312,203. Excluding the impairment, the net loss per diluted share would have been $0.05. For the year ended December 31, 2015, the Company reported a net loss of $9,052,771, or $0.32 per diluted share, which included a pre-tax non-cash impairment of $9,312,203. Excluding the impairment, the net loss per diluted share would have been $0.11. This information compares to net income of $2,708,604, or $0.10 per diluted share for the fourth quarter of 2014, and $8,420,500, or $0.33 per diluted share for the year ended December 31, 2014.
The decrease in revenue is primarily attributed to lower commodity prices received. For the three months ended December 31, 2015, oil sales volume increased to 180,694 barrels, compared to 150,036 barrels for the same period in 2014, and gas sales volume increased to 192,202 MCF (thousand cubic feet), compared to 14,784 MCF for the same period in 2014. For the twelve months ended December 31, 2015, oil sales volume increased to 664,612 barrels, compared to 457,039 barrels for the same period in 2014, and gas sales volume increased to 472,509 MCF, compared to 38,735 MCF for the same period in 2014. The average commodity prices received by Ring were $38.43 per barrel of oil and $2.18 per MCF of natural gas for the quarter ended December 31, 2015, compared to $66.32 per barrel of oil and $2.36 per MCF of natural gas for the quarter ended December 31, 2014. The average prices received for the twelve months ended December 31, 2015 were $44.90 per barrel of oil and $2.48 per MCF of natural gas, compared to $83.04 per barrel of oil and $3.53 per MCF of natural gas for the twelve month period ended December 31, 2014.
Lease operating expenses, including production taxes, for the three months ended December 31, 2015 were $15.63 per barrel of oil equivalent (“BOE”), a 5% increase from the prior year. Depreciation, depletion and amortization costs, including accretion, increased 16% to $17.94 per BOE. General and administrative costs, which included a $604,574 charge for stock based compensation, were $10.44 per BOE, an 11% decrease. For the twelve months ended December 30, 2015, lease operating expenses, including production taxes, were $15.37 per BOE, a 5% increase. Depreciation, depletion and amortization costs, including accretion, were $20.98 per BOE, a 19% decrease, and general and administrative costs, which included a $2,566,716 charge for stock based compensation, were $10.76 per BOE, a 27% decrease from 2014.
Cash provided by operating activities, before changes in working capital, for the three and twelve months ended December 31, 2015 was $2,106,864, or $0.07 per fully diluted share, and $13,416,610, or $0.48 per fully diluted share, compared to $6,532,258 and $27,223,267, or $0.24 and $1.05 per fully diluted share for the same periods in 2014. Earnings before interest, taxes, depletion and other non-cash items (“Adjusted EBITDA”) for the three and twelve months ended December 31, 2015 was $2,421,885, or $0.08 per fully diluted share, and $14,158,760, or $0.50 per fully diluted share, compared to $6,611,916 and $27,137,303, or $0.25 and $1.05 in 2014. (See accompanying table for a reconciliation of net income to adjusted EBITDA).
There was outstanding debt of $45,900,000 on the Company’s $500 million senior secured credit facility at December 31, 2015.
Proved reserves, as determined by Cawley, Gillespie and Associates, Inc., and Williamson Petroleum Consultants, Inc., totaled 24,402,383 barrel of oil equivalents (BOE), a 134% increase over the 10,407,009 BOE for the previous year. Future net revenues before income taxes, discounted at 10% (“PV-10”), based on $48.17 per barrel of oil and $2.51 per MCF of gas, were $240.2 million at year-end 2015. This compared to $281.7 million, using average prices of $85.10 per barrel of oil and $3.95 per MCF of gas, for year-end 2014. Approximately 33% of the proved reserves are classified as proved developed producing (“PDP”), 2% proved developed non-producing (“PDNP”), and 65% proved undeveloped (“PUD”). The proved reserves consist of approximately 91% oil and 9% natural gas. Internal engineering has estimated an additional 11.1 million BOE of probable reserves with a PV-10 of $61.1 million using average prices of $47.59 per barrel of oil and $1.99 per MCF of natural gas.
Mr. Kelly Hoffman, the Company’s Chief Executive Officer, commented, “I am very pleased with our 2015 operating and financial results. We continue to increase production and reserves during a period in which we have virtually halted any new drilling activity. Our operations team has not only done an excellent job maximizing current operating efficiencies, but also in evaluating and identifying future development opportunities within our core assets which are in addition to those stated above. The results of that internal study, combining both the Central Basin Platform and Delaware Basin assets, identified over 1,500 additional potential vertical drilling locations on 10 and 20 acre spacing. Also, in addition, the study, using actual results from surrounding operators, identified over 225 potential horizontal locations. We are cautiously optimistic that commodity prices will start to firm up before year end and are anxious to restart our development drilling. We continue to look at opportunities that would complement our core assets, but regardless of any future acquisitions, the Company is well postured for sustained growth.”
Non-GAAP Financial Measures:
Net loss for the three months ended December 31, 2015 includes a non-cash charge for stock based compensation of $604,574, and a ceiling test impairment charge of $9,312,203. Net loss for the twelve months ended December 31, 2015 includes a non-cash charge for stock based compensation of $2,566,716, and a ceiling test impairment charge of $9,312,203. Excluding such items, the Company’s net loss would have been $0.04 per diluted share for the three months ended December 31, 2015, and $0.05 for the twelve months ended December 31, 2015. 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.
About Ring Energy, Inc.
Ring Energy, Inc. is an oil and gas exploration, development and
production company with current operations in Texas and Kansas.
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, 2015. 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 | Twelve Months Ended | |||||||||||||||||||
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December 31, |
December 31, |
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2015 |
2014 |
2015 |
2014 |
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| Oil and Gas Revenues | $ | 7,362,394 | $ | 9,984,982 | $ | 31,013,892 | $ | 38,089,443 | ||||||||||||
| Costs and Operating Expenses | ||||||||||||||||||||
| Oil and gas production costs | 2,967,232 | 1,796,259 | 9,958,380 | 4,993,166 | ||||||||||||||||
| Oil and gas production taxes | 357,811 | 463,102 | 1,468,073 | 1,760,206 | ||||||||||||||||
| Depreciation, depletion and amortization | 3,648,107 | 2,304,914 | 15,175,791 | 11,807,794 | ||||||||||||||||
| Ceiling test impairment | 9,312,203 |
- |
9,312,203 | - | ||||||||||||||||
| Asset retirement obligation accretion | 168,118 | 50,731 | 418,384 | 154,973 | ||||||||||||||||
| General and administrative expense | 2,220,040 | 1,787,630 | 7,995,395 | 6,803,029 | ||||||||||||||||
| Total Costs and Operating Expenses | 18,673,511 | 6,402,636 | 44,328,226 | 25,519,168 | ||||||||||||||||
| Income (Loss) from Operations | (11,311,117 | ) | 3,582,346 | (13,314,334 | ) | 12,570,275 | ||||||||||||||
| Other Income (Expense) | ||||||||||||||||||||
| Interest income | 4,371 | 7,391 | 6,984 | 85,964 | ||||||||||||||||
| Interest expense | (319,392 | ) | - | (749,134 | ) | - | ||||||||||||||
| Net Other Income | (315,021 | ) | 7,391 | (742,150 | ) | 85,964 | ||||||||||||||
| Income (Loss) Before Provision for Income Taxes | (11,626,138 | ) | 3,589,737 | (14,056,484 | ) | 12,656,239 | ||||||||||||||
| (Provision for) Benefit From Income Taxes | 4,153,092 | (881,133 | ) | 5,003,713 | (4,235,739 | ) | ||||||||||||||
| Net Income (Loss) | ($7,473,046 | ) | $ | 2,708,604 | ($9,052,771 | ) | $ | 8,420,500 | ||||||||||||
| Basic Earnings (Loss) Per Common Share | ($0.25 | ) | $ | 0.11 | ($0.32 | ) | $ | 0.34 | ||||||||||||
| Diluted Earnings (Loss) Per Common Share | ($0.25 | ) | $ | 0.10 | ($0.32 | ) | $ | 0.33 | ||||||||||||
| Basic Weighted-Average Common Shares Outstanding | 30,391,485 | 25,728,571 | 28,176,924 | 24,739,795 | ||||||||||||||||
| Diluted Weighted-Average Common Shares Outstanding | 30,391,485 | 26,769,999 | 28,176,924 | 25,890,285 | ||||||||||||||||
| COMPARATIVE OPERATING STATISTICS | |||||||||||||
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Three Months Ended December 31, |
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| 2015 | 2014 | Change | |||||||||||
| Net Production - BOE per day | 2,312 | 1,658 | 39 | % | |||||||||
| Per BOE: | |||||||||||||
| Average Sales Price | $ | 34.61 | $ | 65.48 | -47 | % | |||||||
| Lease Operating Expenses | 13.95 | 11.78 | 18 | % | |||||||||
| Production Taxes | 1.68 | 3.04 | -45 | % | |||||||||
| DD&A | 17.15 | 15.11 | 14 | % | |||||||||
| Accretion | 0.79 | 0.33 | 139 | % | |||||||||
| General & Administrative Expenses | 10.44 | 11.72 | -11 | % | |||||||||
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Twelve Months Ended December 31, |
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| 2015 | 2014 | Change | |||||||||||
| Net Production - BOE per day | 2,037 | 1,270 | 60 | % | |||||||||
| Per BOE: | |||||||||||||
| Average Sales price | $ | 41.72 | $ | 82.18 | -49 | % | |||||||
| Lease Operating Expenses | 13.40 | 10.77 | 24 | % | |||||||||
| Production Taxes | 1.97 | 3.80 | -48 | % | |||||||||
| DD&A | 20.42 | 25.48 | -20 | % | |||||||||
| Accretion | 0.56 | 0.33 | 70 | % | |||||||||
| General & Administrative Expenses | 10.76 | 14.68 | -27 | % | |||||||||
| RING ENERGY, INC. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| CONSOLIDATED BALANCE SHEET | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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December 31, |
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December 31, |
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2015 |
2014 |
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| ASSETS | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Current Assets | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Cash | $ | 4,431,350 | $ | 8,622,235 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Accounts receivable | 2,507,858 | 3,616,676 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Joint interest billing receivable | 1,629,165 | 2,683,787 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Prepaid expenses and retainers | 146,118 | 160,600 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total Current Assets | 8,714,491 | 15,083,298 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Property and Equipment | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Oil and natural gas properties subject to amortization | 269,590,374 | 166,036,400 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Fixed assets subject to depreciation | 1,539,991 | 1,209,809 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total Property and Equipment | 271,130,365 | 167,246,209 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Accumulated depreciation, depletion and amortization | (29,863,838 | ) | (14,688,047 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Net Property and Equipment | 241,266,527 | 152,558,162 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Deferred Income Taxes | 64,323 | - | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Deferred Financing Costs | 820,904 | - | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total Assets | $ | 250,866,245 | $ | 167,641,460 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Current Liabilities | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Accounts payable | $ | 11,023,269 | $ | 16,241,022 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Other accrued liabilities | 309,898 | 22,029 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total Current Liabilities | 11,333,167 | 16,263,051 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Deferred income taxes | - | 4,939,390 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Long term debt | 45,900,000 | - | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Asset retirement obligation | 7,401,950 | 3,896,489 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total Liabilities | 64,635,117 | 25,098,930 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Stockholders' Equity | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Preferred stock - $0.001 par value; 50,000,000 shares authorized; no shares issued or outstanding |
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- |
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Common stock - $0.001 par value; 150,000,000 shares authorized; 30,391,942 shares and 25,734,467 shares issued and outstanding, respectively |
30,392 |
25,734 |
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| Additional paid-in capital | 193,269,034 | 140,532,323 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Retained earnings (accumulated deficit) | (7,068,298 | ) | 1,984,473 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total Stockholders' Equity | 186,231,128 | 142,542,530 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total Liabilities and Stockholders' Equity | $ | 250,866,245 | $ | 167,641,460 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| RING ENERGY, INC. | |||||||||||||
| STATEMENTS OF CASH FLOW | |||||||||||||
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December 31, |
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December 31, |
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2015 |
2014 |
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| Cash Flows From Operating Activities | |||||||||||||
| Net income (loss) | ($9,052,771 | ) | $ | 8,420,500 | |||||||||
| Adjustments to reconcile net income (loss) to net cash | |||||||||||||
| Provided by operating activities: | |||||||||||||
| Depreciation, depletion and amortization | 15,175,791 | 11,807,794 | |||||||||||
| Ceiling test impairment | 9,312,203 |
- |
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| Accretion expense | 418,384 | 154,973 | |||||||||||
| Share-based compensation | 2,566,716 | 2,517,211 | |||||||||||
| Stock issued for services | - | 87,050 | |||||||||||
| Deferred income tax expense (benefit) | (5,003,713 | ) | 4,235,739 | ||||||||||
| Changes in assets and liabilities: | |||||||||||||
| Accounts receivable | 2,163,440 | (2,412,061 | ) | ||||||||||
| Prepaid expenses | (806,422 | ) | (94,549 | ) | |||||||||
| Accounts payable | (4,929,884 | ) | 9,031,408 | ||||||||||
| Net Cash Provided by Operating Activities | 9,843,744 | 33,748,065 | |||||||||||
| Cash Flows from Investing Activities | |||||||||||||
| Payments to purchase oil and natural gas properties | (77,902,553 | ) | (15,054,649 | ) | |||||||||
| Payments to develop oil and natural gas properties | (31,430,355 | ) | (90,160,236 | ) | |||||||||
| Purchase of equipment, vehicles and leasehold improvements | (330,182 | ) | (951,898 | ) | |||||||||
| Plugging and abandonment cost incurred | (446,192 | ) | (39,316 | ) | |||||||||
| Net Cash Used in Investing Activities | (110,109,282 | ) | (106,206,099 | ) | |||||||||
| Cash Flows From Financing Activities | |||||||||||||
| Proceeds from issuance of notes payable | 45,900,000 | - | |||||||||||
| Proceeds from issuance of common stock | 50,039,853 | 28,514,686 | |||||||||||
| Proceeds from option exercise | 134,800 | 215,000 | |||||||||||
| Net Cash Provided by Financing Activities | 96,074,653 | 28,729,686 | |||||||||||
| Net Increase (Decrease) in Cash | (4,190,885 | ) | (43,728,348 | ) | |||||||||
| Cash at Beginning of Period | 8,622,235 | 52,350,583 | |||||||||||
| Cash at End of Period | $ | 4,431,350 | $ | 8,622,235 | |||||||||
| Supplemental Cash flow Information | |||||||||||||
| Cash paid for interest | $ | 429,742 | - | ||||||||||
| Noncash Investing and Financing Activities | |||||||||||||
| Stock issued as consideration in property acquisition | $ | - | $ | 182,369 | |||||||||
| Asset retirement obligation acquired | 3,361,634 | 575,977 | |||||||||||
| Asset retirement obligation incurred during development | 171,635 | 2,022,445 | |||||||||||
| RECONCILIATION OF CASH FLOW FROM OPERATIONS | |||||||||||||
| Net cash provided by operating activities | $ | 9,843,744 | $ | 33,748,065 | |||||||||
| Change in operating assets and liabilities | (3,572,866 | ) | 6,524,798 | ||||||||||
| Cash flow from operations | $ | 13,416,610 | $ | 27,223,267 | |||||||||
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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 | |||||||||||||
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ADJUSTED EBITDA |
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| December 31, | December 31, | ||||||||||||
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2015 |
2014 |
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| NET INCOME | ($9,052,771 | ) | $ | 8,420,500 | |||||||||
| Interest (income) | (6,984 | ) | (85,964 | ) | |||||||||
| Interest expense | 749,134 | - | |||||||||||
| Income tax expense (benefit) | (5,003,713 | ) | 4,235,739 | ||||||||||
| Depreciation, depletion and amortization | 15,175,791 | 11,807,794 | |||||||||||
| Accretion of discounted liabilities | 418,384 | 154,973 | |||||||||||
| Ceiling test impairment | 9,312,203 | - | |||||||||||
| Stock based compensation | 2,566,716 | 2,517,211 | |||||||||||
| Stock issued as finders fee | - | 87,050 | |||||||||||
| ADJUSTED EBITDA | $ | 14,158,760 | $ | 27,137,303 | |||||||||
View source version on businesswire.com: http://www.businesswire.com/news/home/20160315006750/en/
K M Financial, Inc.
Bill Parsons, 702-489-4447
Source: Ring Energy, Inc.
Released March 15, 2016