MIDLAND, Texas--(BUSINESS WIRE)--Ring Energy, Inc. (NYSE MKT: REI) (“Ring”) (“Company”) announced today
financial results for the first quarter ended March 31, 2016. For the
three month period ended March 31, 2016, Ring had oil and gas revenues
of $6,092,388 compared to $6,045,701 for the quarter ended March 31,
2015, and a net loss of $15,275,044, or $0.50 per diluted share, which
included a pre-tax non-cash impairment of $21,412,086, compared to a net
loss of $975,624, or $0.04 per diluted share, for the same period in
2015. Excluding the after tax impact of the impairment, the net loss per
diluted share for the three month period ended March 31, 2016 would have
been $0.06.
The Company’s sales volumes were significantly higher during the three
months ended March 31, 2016, as compared to the same period in 2015;
however this was offset by lower oil and gas prices received. For the
three months ended March 31, 2016, oil sales volume increased to 191,377
barrels, compared to 137,090 barrels for the same period in 2015, a
39.6% increase, and gas sales volume increased to 256,748 MCF (thousand
cubic feet), compared to 19,848 MCF for the same period in 2015, a
1,193.5% increase. The average commodity prices received by Ring were
$29.20 per barrel of oil and $1.97 per MCF of natural gas for the
quarter ended March 31, 2016, compared to $43.76 per barrel of oil and
$2.36 per MCF of natural gas for the quarter ended March 31, 2015.
Lease operating expenses, including production taxes, for the three
months ended March 31, 2016 were $11.91 per barrel of oil equivalent
(“BOE”), a 22% decrease from the prior year. Depreciation, depletion and
amortization costs, including accretion, decreased 43.5% to $14.97 per
BOE. General and administrative costs, which included a $584,325 charge
for stock based compensation, were $9.48 per BOE, a 23% decrease.
Cash provided by operating activities, before changes in working
capital, for the three months ended March 31, 2016 was $1,254,315 or
$0.04 per fully diluted share, compared to $2,827,356, or $0.11 per
fully diluted share for the same period in 2015. Earnings before
interest, taxes, depletion and other non-cash items (“Adjusted EBITDA”)
for the three months ended March 31, 2016 was $1,666,936, or $0.05 per
fully diluted share, compared to $2,826,576, or $0.11 per fully diluted
share for the same period in 2015. (See accompanying table for a
reconciliation of net income to adjusted EBITDA.)
There was outstanding debt of $50,900,000 on the Company’s $500 million
senior secured credit facility at March 31, 2016. Subsequent to March
31, 2016, the Company completed an underwritten public offering of
11,500,000 shares of common stock at a price to the public of $5.60 per
share. The net proceeds of the offering were approximately $61 million.
The Company paid all principal of $50.9 million and related interest
outstanding under the Credit Facility.
Ring’s Chief Executive Officer, Mr. Kelly Hoffman, stated, “During the
first quarter we drilled and completed one new vertical well on our
Central Basin property, while continuing to upgrade the existing
infrastructure on both the Central Basin and Delaware Basin assets, with
specific attention to our salt water disposal system. Our staff has done
an excellent job of increasing production while reducing costs during
this time of low commodity prices. We have continued to monitor and
analyze the results of surrounding operators that are having excellent
results using horizontal drilling techniques on the San Andres
formation. In late April we completed a public offering of our common
stock which has allowed the Company to pay all principal and interest on
our credit facility, as well as announce a capital expenditure budget
and development program for the remainder of 2016. The budget includes
funds to drill seven new vertical wells and three horizontal wells. Also
included are funds for remedial work, leasing, and continued upgrading
of our current infrastructure. We have excellent assets, a strong
balance sheet and are ready to start drilling.”
Non-GAAP Financial Measures:
Net loss for the three months ended March 31, 2016 includes a non-cash
charge for stock based compensation of $584,325, and a ceiling test
impairment charge of $21,412,086. Excluding such items, the Company’s
net loss would have been $0.05 per diluted share for the three months
ended March 31, 2016. 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, its Form 10-Q for the quarter ended March 31, 2016 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.
|
RING ENERGY, INC.
|
STATEMENTS OF OPERATIONS
|
|
|
|
|
Three Months Ended
|
|
|
|
March 31,
|
|
|
|
|
2016
|
|
|
|
|
2015
|
|
|
|
|
(Unaudited)
|
|
|
(Unaudited)
|
|
|
|
|
|
|
|
Oil and Gas Revenues
|
|
|
$
|
6,092,388
|
|
|
|
$
|
6,045,701
|
|
|
|
|
|
|
|
|
Costs and Operating Expenses
|
|
|
|
|
|
|
Oil and gas production costs
|
|
|
|
2,490,434
|
|
|
|
|
1,867,795
|
|
Oil and gas production taxes
|
|
|
|
299,271
|
|
|
|
|
277,031
|
|
Depreciation, depletion and amortization
|
|
|
|
3,394,627
|
|
|
|
|
3,654,298
|
|
Ceiling test impairment
|
|
|
|
21,412,086
|
|
|
|
|
-
|
|
Asset retirement obligation accretion
|
|
|
|
109,378
|
|
|
|
|
66,979
|
|
General and administrative expense
|
|
|
|
2,220,072
|
|
|
|
|
1,728,987
|
|
|
|
|
|
|
|
|
Total Costs and Operating Expenses
|
|
|
|
29,925,868
|
|
|
|
|
7,595,090
|
|
|
|
|
|
|
|
|
Loss from Operations
|
|
|
|
(23,833,480
|
)
|
|
|
|
(1,549,389
|
)
|
|
|
|
|
|
|
|
Other Income (Expense)
|
|
|
|
|
|
|
Interest expense
|
|
|
|
(415,508
|
)
|
|
|
|
-
|
|
Interest income
|
|
|
|
2,887
|
|
|
|
|
780
|
|
|
|
|
|
|
|
|
Net Other Income
|
|
|
|
(412,621
|
)
|
|
|
|
780
|
|
|
|
|
|
|
|
|
Loss before tax provision
|
|
|
|
(24,246,101
|
)
|
|
|
|
(1,548,609
|
)
|
|
|
|
|
|
|
|
Benefit From Income Taxes
|
|
|
|
8,971,057
|
|
|
|
|
572,985
|
|
|
|
|
|
|
|
|
Net Income (Loss)
|
|
|
|
($15,275,044
|
)
|
|
|
|
($975,624
|
)
|
|
|
|
|
|
|
|
Basic Earnings (Loss) Per Common Share
|
|
|
|
($0.50
|
)
|
|
|
|
($0.04
|
)
|
Diluted Earnings (Loss) Per Common Share
|
|
|
|
($0.50
|
)
|
|
|
|
($0.04
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic Weighted-Average Common Shares Outstanding
|
|
|
|
30,394,360
|
|
|
|
|
25,746,513
|
|
Diluted Weighted-Average Common Shares Outstanding
|
|
|
|
30,394,360
|
|
|
|
|
25,746,513
|
|
|
|
COMPARATIVE OPERATING STATISTICS
|
|
|
|
|
|
Three Months Ended March 31,
|
|
|
|
|
2016
|
|
2015
|
|
Change
|
|
|
|
|
|
|
|
|
Net Production - BOE per day
|
|
|
|
2,573
|
|
|
1,560
|
|
65
|
%
|
Per BOE:
|
|
|
|
|
|
|
|
Average Sales Price
|
|
|
$
|
26.02
|
|
$
|
43.06
|
|
-40
|
%
|
|
|
|
|
|
|
|
|
Lease Operating Expenses
|
|
|
|
10.63
|
|
|
13.30
|
|
-20
|
%
|
Production Taxes
|
|
|
|
1.28
|
|
|
1.97
|
|
-35
|
%
|
DD&A
|
|
|
|
14.50
|
|
|
26.03
|
|
-44
|
%
|
Accretion
|
|
|
|
0.47
|
|
|
0.48
|
|
0
|
%
|
General & Administrative Expenses
|
|
|
|
9.48
|
|
|
12.31
|
|
-23
|
%
|
|
|
RING ENERGY, INC.
|
CONSOLIDATED BALANCE SHEET
|
|
|
|
|
March 31,
|
|
|
|
December 31,
|
|
|
|
|
2016
|
|
|
|
|
|
2015
|
|
|
|
|
|
|
|
|
|
ASSETS
|
|
|
|
|
|
|
|
Current Assets
|
|
|
|
|
|
|
|
Cash
|
|
|
$
|
3,811,166
|
|
|
|
|
$
|
4,431,350
|
|
Accounts receivable
|
|
|
|
2,373,119
|
|
|
|
|
|
2,507,858
|
|
Joint interest billing receivable
|
|
|
|
859,018
|
|
|
|
|
|
1,629,165
|
|
Prepaid expenses and retainers
|
|
|
|
170,686
|
|
|
|
|
|
146,118
|
|
Total Current Assets
|
|
|
|
7,213,989
|
|
|
|
|
|
8,714,491
|
|
Properties and Equipment
|
|
|
|
|
|
|
|
Oil and natural gas properties subject to amortization
|
|
|
|
252,119,193
|
|
|
|
|
|
269,590,374
|
|
Office equipment and automobiles
|
|
|
|
1,539,991
|
|
|
|
|
|
1,539,991
|
|
Total Property and Equipment
|
|
|
|
253,659,184
|
|
|
|
|
|
271,130,365
|
|
Accumulated depreciation, depletion and amortization
|
|
|
|
(33,258,465
|
)
|
|
|
|
|
(29,863,838
|
)
|
Net Property and Equipment
|
|
|
|
220,400,719
|
|
|
|
|
|
241,266,527
|
|
Deferred Income Taxes
|
|
|
|
9,035,380
|
|
|
|
|
|
64,323
|
|
Deferred financing Costs
|
|
|
|
609,038
|
|
|
|
|
|
820,904
|
|
Total Assets
|
|
|
$
|
237,259,126
|
|
|
|
|
$
|
250,866,245
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS' EQUITY
|
|
|
|
|
Current Liabilities
|
|
|
|
|
Accounts payable
|
|
|
$
|
7,246,986
|
|
|
|
|
$
|
11,023,269
|
|
Other accrued liabilities
|
|
|
|
-
|
|
|
|
|
|
309,898
|
|
Total Current Liabilities
|
|
|
|
7,246,986
|
|
|
|
|
|
11,333,167
|
|
Long term debt
|
|
|
|
50,900,000
|
|
|
|
|
|
45,900,000
|
|
Asset retirement obligations
|
|
|
|
7,549,231
|
|
|
|
|
|
7,401,950
|
|
Total Liabilities
|
|
|
|
65,696,217
|
|
|
|
|
|
64,635,117
|
|
|
|
|
|
|
|
|
|
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;
|
|
|
|
|
|
|
|
30,396,942 shares and 30,391,942 shares outstanding, respectively
|
|
|
|
30,397
|
|
|
|
|
|
30,392
|
|
Additional paid-in capital
|
|
|
|
193,875,854
|
|
|
|
|
|
193,269,034
|
|
Retained Earnings
|
|
|
|
(22,343,342
|
)
|
|
|
|
|
(7,068,298
|
)
|
Total Stockholders' Equity
|
|
|
|
171,562,909
|
|
|
|
|
|
186,231,128
|
|
Total Liabilities and Stockholders' Equity
|
|
|
$
|
237,259,126
|
|
|
|
|
$
|
250,866,245
|
|
|
RING ENERGY, INC.
|
STATEMENTS OF CASH FLOW
|
|
|
|
|
Three Months Ended
|
|
|
|
March 31,
|
|
|
|
|
2016
|
|
|
|
|
|
2015
|
|
|
|
|
|
|
|
|
|
Cash Flows From Operating Activities
|
|
|
|
|
|
|
|
Net income
|
|
|
|
($15,275,044
|
)
|
|
|
|
|
($975,624
|
)
|
Adjustments to reconcile net income to net cash
|
|
|
|
provided by operating activities:
|
|
|
|
|
|
|
|
Depreciation, depletion and amortization
|
|
|
|
3,394,627
|
|
|
|
|
|
3,654,298
|
|
Ceiling test impairment
|
|
|
|
21,412,086
|
|
|
|
|
|
-
|
|
Accretion expense
|
|
|
|
109,378
|
|
|
|
|
|
66,979
|
|
Share-based compensation
|
|
|
|
584,325
|
|
|
|
|
|
654,688
|
|
Deferred income tax expense (benefit)
|
|
|
|
(8,971,057
|
)
|
|
|
|
|
(572,985
|
)
|
Changes in assets and liabilities:
|
|
|
|
|
|
|
|
Accounts receivable
|
|
|
|
904,886
|
|
|
|
|
|
445,438
|
|
Prepaid expenses
|
|
|
|
187,298
|
|
|
|
|
|
10,869
|
|
Accounts payable
|
|
|
|
(4,086,181
|
)
|
|
|
|
|
(9,332,248
|
)
|
Net Cash Provided by Operating Activities
|
|
|
|
(1,739,682
|
)
|
|
|
|
|
(6,048,585
|
)
|
Cash Flows from Investing Activities
|
|
|
|
|
|
|
|
Payments to purchase oil and natural gas properties
|
|
|
|
(643,116
|
)
|
|
|
|
|
(954,458
|
)
|
Payments to develop oil and natural gas properties
|
|
|
|
(3,258,542
|
)
|
|
|
|
|
(8,667,163
|
)
|
Purchase of equipment, vehicles and leasehold improvements
|
|
|
|
-
|
|
|
|
|
|
(164,404
|
)
|
Plugging and abandonment cost incurred
|
|
|
|
(1,344
|
)
|
|
|
|
|
-
|
|
Net Cash Used in Investing Activities
|
|
|
|
(3,903,002
|
)
|
|
|
|
|
(9,786,025
|
)
|
Cash Flows From Financing Activities
|
|
|
|
|
|
|
|
Proceeds from issuance of notes payable
|
|
|
|
5,000,000
|
|
|
|
|
|
10,000,000
|
|
Proceeds from option exercise
|
|
|
|
22,500
|
|
|
|
|
|
62,500
|
|
Net Cash Provided by Financing Activities
|
|
|
|
5,022,500
|
|
|
|
|
|
10,062,500
|
|
Net Increase (Decrease) in Cash
|
|
|
|
(620,184
|
)
|
|
|
|
|
(5,772,110
|
)
|
Cash at Beginning of Period
|
|
|
|
4,431,350
|
|
|
|
|
|
8,622,235
|
|
Cash at End of Period
|
|
|
$
|
3,811,166
|
|
|
|
|
$
|
2,850,125
|
|
Supplemental Cash Flow Information
|
|
|
|
|
|
|
|
Cash paid for interest
|
|
|
$
|
352,662
|
|
|
|
|
|
-
|
|
Noncash Investing and Financing Activities
|
|
|
|
|
|
|
|
Asset retirement obligation incurred during development
|
|
|
$
|
39,247
|
|
|
|
|
$
|
31,575
|
|
|
|
|
|
|
|
|
|
RECONCILIATION OF CASH FLOW FROM OPERATIONS
|
|
|
|
|
|
|
|
|
Net cash provided by operating activities
|
|
|
|
($1,739,682
|
)
|
|
|
|
|
($6,048,585
|
)
|
Change in operating assets and liabilities
|
|
|
|
2,993,997
|
|
|
|
|
|
8,875,941
|
|
|
|
|
|
|
|
|
|
Cash flow from operations
|
|
|
$
|
1,254,315
|
|
|
|
|
$
|
2,827,356
|
|
|
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,
|
|
|
|
2016
|
|
|
|
2015
|
|
|
|
|
|
|
|
|
NET INCOME (LOSS)
|
|
|
($15,275,044)
|
|
|
|
($975,624)
|
|
|
|
|
|
|
|
|
Interest (income)
|
|
|
(2,887)
|
|
|
|
(780)
|
Interest expense
|
|
|
415,508
|
|
|
|
-
|
Income tax expense (benefit)
|
|
|
(8,971,057)
|
|
|
|
(572,985)
|
Depreciation, depletion and amortization
|
|
|
3,394,627
|
|
|
|
3,654,298
|
Accretion of discounted liabilities
|
|
|
109,378
|
|
|
|
66,979
|
Ceiling test impairment
|
|
|
21,412,086
|
|
|
|
-
|
Share-based compensation
|
|
|
584,325
|
|
|
|
654,688
|
|
|
|
|
|
|
|
|
ADJUSTED EBITDA
|
|
|
$1,666,936
|
|
|
|
$2,826,576
|
|
