Ring Energy Executes Targeted Hedging Transactions to Further Increase Free Cash Flow Generation in 2021
THE WOODLANDS, Texas, June 07, 2021 (GLOBE NEWSWIRE) -- Ring Energy, Inc. (NYSE American: REI) (“Ring” or the “Company”) today provided an update on its derivate positions for 2021 and 2022 as it opportunistically responds to an improved crude oil price environment.
Key Changes to Hedge Book
- Bought back a 1,500 barrels of oil per day (“Bbl/d”) call option for June 1 through December 31, 2021, and entered into an approximate 879 Bbls/d calendar 2022 swap contract for no net cost;
- Anticipate more than 320,000 barrels of crude oil sales for June 1 through December 31, 2021, to be realized at a higher level than the $55.35 per barrel ceiling price previously in place;
- Additionally, the 2022 swap position is priced higher than the $45.66 per barrel collective average price previously in place; and
- Expected increase to cash flow from higher realized pricing in 2021 will primarily be used to further pay down debt.
Mr. Paul D. McKinney, Chairman of the Board and Chief Executive Officer, commented, “When we entered into contracts to substantially fill our hedge book for expected 2021 production in late fall of last year, we were operating in a backdrop of $45 per barrel WTI primarily due to the economic impacts of COVID-19. Moving into our fall bank redetermination process, our hedging strategy was appropriately designed to lock in 2021 pricing that fully funded our targeted work program while guaranteeing the necessary cash flow to pay down debt. Substantially driven by the dramatic improvement in economic activity with the worldwide recovery from COVID-19, there has been an almost 50% increase in WTI crude oil pricing over the past six months. This much-improved price environment has allowed us to pivot to a more opportunistic hedging strategy. The hedging transactions that we recently executed will generate additional free cash flow in 2021, further strengthen our financial and market position, and drive meaningful returns to our shareholders. We remain focused on steadily paying down debt, divesting of non-core assets, and continuously improving our debt-to-EBITDA metrics.”
Updated Derivative Positions
| RING ENERGY, INC. | |||||||||||
| Summary of Derivative Positions | |||||||||||
| Commodity | Effective Date | End Date | Structure | Daily Volume (Bbls/d) |
Total Volume (Bbls) |
Weighted Avg. Swap Price (per Bbl) |
Weighted Avg. Put/Floor Price (per Bbl) |
Weighted Avg. Call/Ceiling Price (per Bbl) |
|||
| WTI - Crude | 06/01/21 | 12/31/21 | Collar(1) | 1,000 | 214,000 | $45.00 | $54.75 | ||||
| WTI - Crude | 06/01/21 | 12/31/21 | Collar(1) | 1,000 | 214,000 | $45.00 | $52.71 | ||||
| WTI - Crude | 06/01/21 | 12/31/21 | Collar(1) | 1,000 | 214,000 | $40.00 | $55.08 | ||||
| WTI - Crude | 06/01/21 | 12/31/21 | Put/Floor | 1,500 | 321,000 | $40.00 | |||||
| WTI - Crude | 06/01/21 | 12/31/21 | Swap | 4,500 | 963,000 | $45.42 | |||||
| WTI - Crude | 01/01/22 | 12/31/22 | Swap(2) | 3,129 | 1,142,250 | $46.60 | |||||
| (1) From June 1 through December 31, 2021, the collars represent a collective total of 642,000 Bbls at weighted average put/floor and call/ceiling prices of $42.22/Bbl and $54.18/Bbl, respectively. | |||||||||||
| (2) Represents previous commitment of 2,250 Bbls/d and recent additional commitment of approximately 879 Bbls/d. | |||||||||||
About Ring Energy, Inc.
Ring Energy, Inc. is an oil and gas exploration, development, and production company with current operations focused on the conventional development of its Permian Basin assets in West Texas and New Mexico. For additional information, please visit 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, 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.
Contact Information
Al Petrie Advisors
Al Petrie, Senior Partner apetrie@ringenergy.com
Phone: 281-975-2146
Released June 7, 2021