Ring Energy Announces Financial Results for First Quarter 2014

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418% Increase in Revenue for the Three Months to $5.97 Million
221% Increase in Net Income for the Three Months to $1.1 Million

MIDLAND, Texas--(BUSINESS WIRE)-- Ring Energy, Inc. (NYSE MKT: REI) (“Ring”)(“Company”) announced today record financial results for the first quarter ended March 31, 2014. For the three month period ended March 31, 2014, Ring had oil and gas revenues of $5,970,452 compared to $1,151,957 for the quarter ended March 31, 2013, a 418% increase and net income of $1,163,689, or $0.05 per diluted share, compared to net loss of $965,280 or $0.07 loss per diluted share, for the same period in 2013, a 221% increase.

The revenue increase was due to increases in production volumes, primarily due to development activity. For the three months ended March 31, 2014, oil sales volume increased to 63,944 barrels, compared to 14,245 barrels for the same period in 2013, a 349% increase and gas sales volume increased to 8,617 MCF (thousand cubic feet), compared to 5,757 MCF for the same period in 2013, a 50% increase. The remaining production that was not sold by March 31, 2014, was held in storage and sold in the second quarter. The average commodity prices received by Ring were $92.71 per barrel of oil and $4.88 per MCF of natural gas for the quarter ended March 31, 2014, compared to $88.62 per barrel of oil and $3.77 per MCF of natural gas for the quarter ended March 31, 2013.

Lease operating expenses for the three months ended March 31, 2014 were $11.79 per barrel of oil equivalent (“BOE”). Depreciation, depletion and amortization costs were $23.40 per BOE, and general and administrative costs, which included a $659,468 charge for stock based compensation, were $23.93 per BOE.

Net cash flow from operations for the three months ended March 31, 2014 was $4,061,171,or $0.16 per diluted share, compared to net cash flow of $205,544, or $0.01 per diluted share for the same period in 2013 (1).

Ring’s Chief Executive Officer, Mr. Kelly Hoffman, stated, “We continue to ramp up our 2014 development program. Our first quarter resulted in 24 development wells drilled and one re-completion on an existing well on our Permian Basin properties, where we continue to have a 100% success rate on newly drilled development wells. We now have two rigs drilling full time in Texas. We currently have a third rig drilling in Kansas and hope to announce the results of the initial five wells drilled in Kansas by mid-June. We plan to drill as many as 35 new wells in Texas in the second quarter, while continuing the re-stimulation of selected existing wells. We have increased our credit facility to a maximum of $50,000,000, with an immediate initial borrowing base of $25,000,000. We are in a position to maintain an aggressive development program, while continuing to seek additional acquisitions.”

(1)

 

Cash Flow from Operations is a non-GAAP financial measure that represents “Net Cash Provided By Operating Activities” adjusted for the change in operating assets and liabilities. See below for a reconciliation of the related amounts.

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, 2013. 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,

2014     2013

(Unaudited)

(Unaudited)

 
Oil and Gas Revenues $5,970,452       $1,151,957  
 
Costs and Operating Expenses
Oil and gas production costs 771,100 141,255
Oil and gas production taxes 275,961 53,217
Depreciation, depletion and amortization 1,530,196 343,608
Accretion expense 24,382 11,453
General and administrative expense 1,564,461       1,567,704  
 
Total Costs and Operating Expenses 4,166,100       2,117,237  
 
Other Income (Expense)
Interest income 42,773       -  
 
Net Other Income 42,773       -  
 
Income (Loss) Before Provision for Income Taxes 1,847,125 (965,280 )
 
Income tax provision (683,436 )     -  
 
Net Income (Loss) $1,163,689       ($965,280 )
 
Basic Net Income (Loss) Per Common Share $0.05 ($0.07 )
Diluted Net Income (Loss) Per Common Share $0.05 ($0.07 )
 
 
Basic Weighted-Average Common Shares Outstanding 23,581,357 14,229,166
Diluted Weighted-Average Common Shares Outstanding 24,704,652 14,229,166
 
 
 
RING ENERGY, INC.
CONSOLIDATED BALANCE SHEET
 
      March 31,     December 31,

2014

2013

 
ASSETS
Current Assets
Cash $37,732,846 $52,350,583
Accounts receivable 2,881,127 3,888,402
Prepaid expenses and retainers 47,213   66,051  
Total Current Assets 40,661,186   56,305,036  
Property and Equipment, Using Full cost Accounting
Oil and gas properties subject to amortization 80,615,298 58,040,724
Office equipment 381,762   257,911  
Total Property and Equipment 80,997,060 58,298,635
Less: Accumulated depreciation and amortization (4,410,449 ) (2,880,253 )
Net Property and Equipment 76,586,611   55,418,382  
Total Assets $117,247,797   $111,723,418  
 
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Accounts payable $7,346,378 $6,229,490
Other accrued liabilities 2,323,456   1,002,153  
Total Current Liabilities 9,669,834   7,231,643  
Noncurrent Liabilities
Deferred income taxes 1,387,087 703,651
Asset retirement obligation 1,801,224   1,182,410  
Total Noncurrent Liabilities 3,188,311   1,886,061  
 
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;

23,601,674 shares and 23,576,313 shares outstanding, respectively

23,601 23,576
Additional paid-in capital 109,638,389 109,018,165
Accumulated deficit (5,272,338 ) (6,436,027 )
Total Stockholders' Equity 104,389,652   102,605,714  
Total Liabilities and Stockholders' Equity $117,247,797   $111,723,418  
 
 
 
RING ENERGY, INC.
STATEMENTS OF CASH FLOW
 
      Three Months Ended
March 31,
2014     2013
 
Cash Flows From Operating Activities
Net income $1,163,689 ($965,280 )

Adjustments to reconcile net income to net cash provided by operating activities:

Depreciation, depletion and amortization 1,530,196 343,608
Accretion expense 24,382 11,453
Share-based compensation 659,468 815,763
Provision for income taxes 683,436 -
Changes in assets and liabilities:
Accounts receivable 1,007,275 (66,356 )
Prepaid expenses 18,838 (2,635 )
Accounts payable 2,438,191       (509,975 )
Net Cash Provided by Operating Activities 7,525,475       (373,422 )
Cash Flows from Investing Activities
Payments to purchase oil and natural gas properties (8,121,630 ) (114,074 )
Payments to develop oil and natural gas properties (13,858,512 ) (1,368,992 )
Purchase of equipment and vehicles (123,851 )     -  
Net Cash Used in Investing Activities (22,103,993 )     (1,483,066 )
Cash Flows From Financing Activities
Proceeds from option exercise 22,500 -
Payment of offering costs (61,719 ) -
Proceeds from issuance of common stock -       450,000  
Net Cash Provided by Financing Activities (39,219 )     450,000  
Net Increase (Decrease) in Cash (14,617,737 ) (1,406,488 )
Cash at Beginning of Period 52,350,583       5,404,167  
Cash at End of Period $37,732,846       $3,997,679  
Noncash Investing and Financing Activities
Revision of asset retirement obligation estimate $ - $211,691
Asset retirement obligation acquired 294,772 -
Asset retirement obligation incurred during development 299,660       -  
 
RECONCILIATION OF CASH FLOW FROM OPERATIONS
 
Net cash provided by operating activities $7,525,475 ($373,422 )
Change in operating assets and liabilities (3,464,304 )     578,966  
 
Cash flow from operations $4,061,171       $205,544  
 

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,

2014

2013

 
NET INCOME (LOSS) $1,163,689 ($965,280 )
 
Interest expense (Income) (42,773 ) -
Income tax expense 683,436 -
Depreciation, depletion and amortization 1,530,196 343,608
Accretion expense 24,382 11,453
Share-based compensation 659,468   815,763  
 
ADJUSTED EBITDA $4,018,398   $205,544  

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

Source: Ring Energy, Inc.

Released May 8, 2014