Ring Energy Announces Second Quarter and Six Month 2018 Financial and Operational Results

MIDLAND, Texas--(BUSINESS WIRE)-- Ring Energy, Inc. (NYSE American: REI) (“Ring”) (“Company”) announced today financial results for the three months and six months ended June 30, 2018. For the three month period ended June 30, 2018, Ring reported oil and gas revenues of $29,924,883, compared to revenues of $14,503,309 for the quarter ended June 30, 2017. For the six months ended June 30, 2018, the Company reported oil and gas revenues of $59,816,274, compared to $26,747,102 for the six months ended June 30, 2017.

For the three months ended June 30, 2018, Ring reported net income of $4,719,806, or $0.08 per diluted share. For the six months ended June 30, 2018, the Company reported net income of $10,385,440, or $0.17 per diluted share. This compares to net income of $1,910,763, or $0.04 per fully diluted share for the three months ended June 30, 2017, and net income of $3,190,044, or $0.06 per fully diluted share for the six month period ended June 30, 2017.

For the three months ended June 30, 2018, the net income included a pre-tax “Unrealized Loss on Derivatives” of $1,099,273. Excluding this item, the net income per diluted share would have been $0.09. For the six months ended June 30, 2018, the net income included a pre-tax “Unrealized Loss on Derivatives” of $1,889,974. Excluding this item, the net income per diluted share would have been $0.20.

For the three months ended June 30, 2018, oil sales volume increased to 469,446 barrels, compared to 306,402 barrels for the same period in 2017, a 53.2% increase, and gas sales volume increased to 319,056 MCF (thousand cubic feet), compared to 190,044 MCF for the same period in 2017, a 67.8% increase. On a barrel of oil equivalent (“BOE”) basis for the three months ended June 30, 2018, production sales increased to 522,622 BOEs, compared to 338,076 BOEs for the same period in 2017, a 54.5% increase, and 514,869 BOEs for the first quarter of 2018, a 1.5% increase. For the six months ended June 30, 2018, oil sales volume increased to 949,310 barrels, compared to 546,662 barrels for the same period in 2017, a 73.6% increase, and gas sales volume increased to 529,087 MCF, compared to 358,393 MCF for the same period in 2017, a 47.6% increase. On a BOE basis for the six months ended June 30, 2018, production sales increased to 1,037,491 BOEs, compared to 606,394 BOEs for the same period in 2017, a 71.1% increase.

The average commodity prices received by the Company were $61.70 per barrel of oil and $3.02 per MCF of natural gas for the quarter ended June 30, 2018, compared to $45.34 per barrel of oil and $3.22 per MCF of natural gas for the quarter ended June 30, 2017. The average prices received for the six months ended June 30, 2018 were $61.21 per barrel of oil and $3.24 per MCF of natural gas, compared to $46.81 per barrel of oil and $3.23 per MCF of natural gas for the six month period ended June 30, 2017.

Lease operating expenses, including production taxes, for the three months ended June 30, 2018 were $15.43 per BOE, a 24% increase from the prior year. Depreciation, depletion and amortization costs, including accretion, increased 13.5% to $17.82 per BOE. General and administrative costs, which included a $1,002,348 charge for stock based compensation, were $6.03 per BOE, a 14% decrease. For the six months ended June 30, 2018, lease operating expenses, including production taxes, were $14.72 per BOE, a 19% increase. Depreciation, depletion and amortization costs, including accretion, were $17.32 per BOE, a 17.7% increase, and general and administrative costs, which included a $2,083,547 charge for stock based compensation, were $6.01 per BOE, a 30% decrease.

Cash provided by operating activities, before changes in working capital, for the three and six months ended June 30, 2018 was $17,389,257, or $0.28 per fully diluted share, and $36,557,519, or $0.61 per fully diluted share, compared to $8,791,004 and $16,012,940, or $0.17 and $0.32 per fully diluted share for the same periods in 2017. Earnings before interest, taxes, depletion and other non-cash items (“Adjusted EBITDA”) for the three and six months ended June 30, 2018 was $17,306,266, or $0.28 per fully diluted share, and $36,510,058, or $0.61 per fully diluted share, compared to $8,743,693 and $15,848,950, or $0.17 and $0.31 in 2017. (See accompanying table for a reconciliation of net income to adjusted EBITDA).

On June 20, 2018, the Company announced it had increased the borrowing base on its $500 million senior secured credit facility from $60 million to $175 million. There was no outstanding debt on the Company’s $500 million senior secured credit facility at June 30, 2018.

Mr. Kelly Hoffman, the Company’s Chief Executive Officer, commented, “We resolved a couple of minor drilling and production delays early in the quarter and have seen our production continue to grow, exceeding 6,600 BOEs per day by the end of June. With the continued success of our horizontal drilling and development program and the positive results from both the North Gaines and Brushy Canyon wells, that growth will not only continue but accelerate, moving us closer to our goal of cash flow positive by the end of the year. We continue to see many acquisition opportunities in both the Central Basin Platform and Delaware Basin. We have increased our borrowing base to $175 million on our senior secured credit facility and will continue to look for opportunities that will be immediately accretive to the Company and its shareholders.”

Non-GAAP Financial Measures:

Net income for the three months ended June 30, 2018 includes a non-cash charge for stock based compensation of $1,002,348. Net income for the six months ended June 30, 2018 includes a non-cash charge for stock based compensation of $2,083,547. Excluding such items, the Company’s net loss would have been $0.09 per diluted share for the three months ended June 30, 2018, and net earnings of $0.20 for the six months ended June 30, 2018. 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.
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, 2017, its Form 10-Q for the quarter ended June 30, 2018 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.

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

Source: Ring Energy, Inc.

Released August 8, 2018