MIDLAND, Texas--(BUSINESS WIRE)--Ring Energy, Inc. (NYSE MKT: REI) (“Ring”) (“Company”) announced today
financial results for the three months and nine months ended September
30, 2016. For the three month period ended September 30, 2016, Ring had
oil and gas revenues of $7,822,543, compared to $8,629,007 for the
quarter ended September 30, 2015. For the nine month period ended
September 30, 2016, the Company reported oil and gas revenues of
$21,019,540, compared to oil and gas revenues of $23,651,498 for the
nine month period ended September 30, 2015. For the third quarter of
2016, Ring reported a net loss of $5,944,137, or $0.14 per diluted
share, which included a pre-tax non-cash impairment of $9,648,942.
Excluding the impairment, the net gain per diluted share would have been
$0.01. For the nine months ended September 30, 2016, the Company
reported a net loss of $37,160,681, or $1.00 per diluted share, which
included a pre-tax non-cash impairment of $56,513,016. Excluding the
impairment, the net loss per diluted share would have been $0.04. This
information compares to a net loss of $1,138,268, or $0.04 per fully
diluted share, for the three months ended September 30, 2015, and a net
loss for the nine month period ended September 30, 2015 of $1,579,725,
or $0.06 per fully diluted share.
For the three months ended September 30, 2016, oil sales volume
decreased to 174,707 barrels, compared to 181,069 barrels for the same
period in 2015, a 4% decrease, and gas sales volume increased to 229,456
MCF (thousand cubic feet), compared to 165,942 MCF for the same period
in 2015, a 38% increase. On a barrel of oil equivalent (“BOE”) basis for
the three months ended September 30, 2016 production sales increased to
212,950 BOEs, compared to 208,726 BOEs for the same period in 2015, a 2%
increase. For the nine months ended September 30, 2016, oil sales volume
increased to 527,010 barrels, compared to 483,918 barrels for the same
period in 2015, a 9% increase and gas sales volume increased to 688,196
MCF, compared to 280,307 MCF for the same period in 2015, a 146%
increase. On a BOE basis for the nine months ended September 30, 2016
production sales increased to 641,709 BOEs, compared to 530,636 BOEs for
the same period in 2015, a 21% increase.
The average commodity prices received by Ring were $40.83 per barrel of
oil and $3.01 per MCF of natural gas for the quarter ended September 30,
2016, compared to $45.24 per barrel of oil and $2.63 per MCF of natural
gas for the quarter ended September 30, 2015. The average prices
received for the nine months ended September 30, 2016 were $36.72 per
barrel of oil and $2.42 per MCF of natural gas, compared to $47.31 per
barrel of oil and $2.70 per MCF of natural gas for the nine month period
ended September 30, 2015.
Lease operating expenses, including production taxes, for the three
months ended September 30, 2016 were $12.77 per BOE, a 20% decrease from
the prior year. Depreciation, depletion and amortization costs,
including accretion, decreased 45% to $12.65 per BOE. General and
administrative costs, which included a $555,587 charge for stock based
compensation, were $8.84 per BOE, an 8% decrease. For the nine months
ended September 30, 2016, lease operating expenses, including production
taxes, were $12.55 per BOE, a 18% decrease. Depreciation, depletion and
amortization costs, including accretion, were $13.87 per BOE, a 38%
decrease, and general and administrative costs, which included a
$1,647,554 charge for stock based compensation, were $9.39 per BOE, a
14% decrease from 2015.
Cash provided by operating activities, before changes in working
capital, for the three and nine months ended September 30, 2016 was
$3,687,847, or $0.09 per fully diluted share, and $8,077,511, or $0.22
per fully diluted share, compared to $3,600,788 and $11,309,746, or
$0.12 and $0.41 per fully diluted share for the same periods in 2015.
Earnings before interest, taxes, depletion and other non-cash items
(“Adjusted EBITDA”) for the three and nine months ended September 30,
2016 was $3,777,294, or $0.09 per fully diluted share, and $8,591,950,
or $0.23 per fully diluted share, compared to $3,949,694 and
$11,736,875, or $0.13 and $0.43 in 2015. (See accompanying table for a
reconciliation of net income to adjusted EBITDA).
There was no outstanding debt on the Company’s $500 million senior
secured credit facility at September 30, 2016.
Ring’s Chief Executive Officer, Mr. Kelly Hoffman, stated, “In the third
quarter we continued to work hard at cutting costs and maximizing
efficiencies. On a BOE basis we reduced our operating costs over 7%
while increasing our overall production by 9.5% compared to our second
quarter this year. We drilled and completed three new vertical
development wells – one on our Central Basin Property (“CBP”) and two on
our Delaware Basin (“Delaware”) asset. We also completed one new
vertical well on our Delaware that was drilled in the second quarter.
That well was drilled through the Cherry Canyon formation to the Brushy
Canyon for the purpose of obtaining new logs and core samples which are
critical as we start to put together our 2017 capital expenditure
budget. We also drilled our first three horizontal San Andres wells on
our CBP which are in varying stages of completion. Based on the oil
production we are currently seeing we are extremely encouraged and are
hopeful we will see peak production towards the end of the fourth
quarter. We reported in September that we have doubled our horizontal
footprint in the CBP and are continuing to aggressively look for
opportunities to continue that growth.”
Non-GAAP Financial Measures:
Net loss for the three months ended September 30, 2016 includes a
non-cash charge for stock based compensation of $555,587, and a ceiling
test impairment charge of $9,648,942. Excluding such items, the
Company’s net earnings would have been $0.01 per diluted share. Net loss
for the nine months ended September 30, 2016 includes a non-cash charge
for stock based compensation of $1,647,554, and a ceiling test
impairment charge of $56,513,016. Excluding such items, the Company’s
net loss would have been $0.01 per diluted share. 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 September 30, 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.
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RING ENERGY, INC.
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STATEMENTS OF OPERATIONS
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Three Months Ended
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Nine Months Ended
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September 30,
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September 30,
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2016
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2015
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2016
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2015
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(Unaudited)
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(Unaudited)
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(Unaudited)
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(Unaudited)
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Oil and Gas Revenues
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$
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7,822,543
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$
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8,629,007
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$
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21,019,540
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$
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23,651,498
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Costs and Operating Expenses
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Oil and gas production costs
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2,329,228
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2,917,296
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7,019,771
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6,991,148
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Oil and gas production taxes
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389,029
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410,347
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1,032,335
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1,110,262
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Depreciation, depletion and amortization
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2,568,153
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4,668,353
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8,541,981
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11,527,684
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Ceiling test impairment
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9,648,942
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-
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56,513,016
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-
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Accretion expense
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125,813
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103,887
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360,167
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250,266
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General and administrative expense
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1,882,579
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2,002,638
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6,023,038
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5,775,355
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Total Costs and Operating Expenses
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16,943,744
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10,102,521
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79,490,308
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25,654,715
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Income (Loss) from Operations
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(9,121,201
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(1,473,514
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(58,470,768
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(2,003,217
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Other Income
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Interest expense
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(95,864
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(350,737
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(597,910
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(429,742
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Interest income
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6,417
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1,831
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83,470
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2,613
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Net Other Income
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(89,447
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(348,906
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(514,440
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(427,129
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Income (Loss) Before Provision for Income Taxes
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(9,210,648
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(1,822,420
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(58,985,208
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(2,430,346
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(Provision For) Benefit From Income Taxes
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3,266,511
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684,152
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21,824,527
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850,621
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Net Income (Loss)
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($5,944,137
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($1,138,268
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($37,160,681
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($1,579,725
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)
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Basic Net Income (Loss) Per Common Share
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($0.14
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($0.04
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($1.00
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($0.06
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Diluted Net Income (Loss) Per Common Share
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($0.14
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($0.04
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($1.00
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($0.06
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Basic Weighted-Average Common Shares Outstanding
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41,917,061
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30,372,701
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36,996,932
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27,430,624
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Diluted Weighted-Average Common Shares Outstanding
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41,917,061
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30,372,701
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36,996,932
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27,430,624
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COMPARATIVE OPERATING STATISTICS
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Three Months Ended September 30,
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2016
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2015
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Change
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Net Sales - BOE per day
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2,315
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2,269
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2
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%
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Per BOE:
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Average Sales Price
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$
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36.73
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$
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41.34
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-11
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%
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Lease Operating Expenses
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$
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10.94
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$
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13.98
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-22
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%
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Production Taxes
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$
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1.83
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$
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1.96
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-7
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%
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DD&A
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$
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12.06
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$
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22.36
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-46
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%
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Accretion
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$
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0.59
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$
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0.50
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18
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%
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General & Administrative Expenses
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$
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8.84
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$
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9.59
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-8
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%
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Nine Months Ended September 30,
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2016
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2015
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Change
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Net Sales - BOE per day
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2,342
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1,944
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20
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%
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Per BOE:
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Average Sales price
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$
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32.76
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$
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44.57
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-26
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%
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Lease Operating Expenses
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$
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10.94
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$
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13.18
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-17
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%
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Production Taxes
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$
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1.61
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$
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2.09
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-23
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%
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DD&A
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$
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13.31
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$
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21.73
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-39
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%
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Accretion
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$
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0.56
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$
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0.47
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19
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%
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General & Administrative Expenses
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$
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9.39
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$
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10.88
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-14
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%
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RING ENERGY, INC.
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CONSOLIDATED BALANCE SHEET
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September 30,
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December 31,
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2016
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2015
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ASSETS
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Current Assets
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Cash
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$
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2,249,007
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$
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4,431,350
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Accounts receivable
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2,965,320
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2,507,858
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Joint Interest billing receivable
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611,236
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1,629,165
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Prepaid expenses and retainers
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330,600
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146,118
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Total Current Assets
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6,156,163
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8,714,491
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Property and Equipment, Using Full Cost Accounting
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Oil and natural gas properties subject to amortization
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235,671,313
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269,590,374
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Office equipment and automobiles
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1,549,311
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1,539,991
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Total Property and Equipment
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237,220,624
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271,130,365
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Accumulated depreciation, depletion and amortization
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(38,405,819
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(29,863,838
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Net Property and Equipment
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|
|
|
|
|
198,814,805
|
|
|
|
|
241,266,527
|
|
Deferred Income Taxes
|
|
|
|
|
|
|
21,888,849
|
|
|
|
|
64,323
|
|
Deferred Financing Costs
|
|
|
|
|
|
|
473,696
|
|
|
|
|
820,904
|
|
Total Assets
|
|
|
|
|
|
|
$
|
227,333,513
|
|
|
|
$
|
250,866,245
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS' EQUITY
|
|
|
|
|
|
|
|
|
|
Current Liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounts payable
|
|
|
|
|
|
|
$
|
7,435,554
|
|
|
|
$
|
11,023,269
|
|
Other accrued liabilities
|
|
|
|
|
|
|
-
|
|
|
|
|
309,898
|
|
Total Current Liabilities
|
|
|
|
|
|
|
7,435,554
|
|
|
|
|
11,333,167
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Long term debt
|
|
|
|
|
|
|
|
-
|
|
|
|
|
45,900,000
|
|
Asset retirement obligations
|
|
|
|
|
|
|
8,002,787
|
|
|
|
|
7,401,950
|
|
Total Liabilities
|
|
|
|
|
|
|
|
15,438,341
|
|
|
|
|
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;
41,917,061 shares and 30,391,942 shares outstanding, respectively
|
|
41,917
|
|
|
|
30,392
|
|
Additional paid-in capital
|
|
|
|
|
|
|
256,082,234
|
|
|
|
|
193,269,034
|
|
Retained Loss
|
|
|
|
|
|
|
|
(44,228,979
|
)
|
|
|
|
(7,068,298
|
)
|
Total Stockholders' Equity
|
|
|
|
|
|
|
211,895,172
|
|
|
|
|
186,231,128
|
|
Total Liabilities and Stockholders' Equity
|
|
|
|
|
$
|
227,333,513
|
|
|
|
$
|
250,866,245
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
RING ENERGY, INC.
|
STATEMENTS OF CASH FLOW
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended
|
|
|
|
|
|
|
|
|
September 30,
|
|
|
|
|
|
|
|
|
2016
|
|
|
2015
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash Flows From Operating Activities
|
|
|
|
|
|
|
|
|
Net Loss
|
|
|
|
|
|
|
|
($37,160,681
|
)
|
|
|
|
($1,579,725
|
)
|
Adjustments to reconcile net loss to net cash used in operating
activities:
|
|
|
|
|
|
|
Depreciation, depletion and amortization
|
|
|
|
8,541,981
|
|
|
|
|
11,527,684
|
|
Ceiling test impairment
|
|
|
|
|
|
56,513,016
|
|
|
|
|
-
|
|
Accretion expense
|
|
|
|
|
|
|
360,167
|
|
|
|
|
250,266
|
|
Share-based compensation
|
|
|
|
|
|
1,647,554
|
|
|
|
|
1,962,142
|
|
Deferred income tax benefit
|
|
|
|
|
|
(21,824,526
|
)
|
|
|
|
(850,621
|
)
|
Changes in assets and liabilities:
|
|
|
|
|
|
|
|
Accounts receivable
|
|
|
|
|
|
|
560,467
|
|
|
|
|
916,843
|
|
Prepaid expenses
|
|
|
|
|
|
|
162,726
|
|
|
|
|
(904,052
|
)
|
Accounts payable
|
|
|
|
|
|
|
(3,897,613
|
)
|
|
|
|
(8,737,901
|
)
|
Net Cash Provided by (Used in) Operating Activities
|
|
|
|
4,903,091
|
|
|
|
|
2,584,636
|
|
Cash Flows from Investing Activities
|
|
|
|
|
|
|
|
|
Payments to purchase oil and natural gas properties
|
|
|
|
(6,154,997
|
)
|
|
|
|
(77,191,925
|
)
|
Payments to develop oil and natural gas properties
|
|
|
|
(16,190,471
|
)
|
|
|
|
(21,449,757
|
)
|
Purchase of equipment, vehicles and leasehold improvements
|
|
|
(9,320
|
)
|
|
|
|
(330,182
|
)
|
Plugging and abandonment cost incurred
|
|
|
|
|
(7,817
|
)
|
|
|
|
(186,626
|
)
|
Net Cash Used in Investing Activities
|
|
|
|
|
(22,362,605
|
)
|
|
|
|
(99,158,490
|
)
|
Cash Flows From Financing Activities
|
|
|
|
|
|
|
|
|
Proceeds from issuance of common stock
|
|
|
|
|
61,064,671
|
|
|
|
|
50,039,853
|
|
Proceeds from issuance of notes payable
|
|
|
|
|
5,000,000
|
|
|
|
|
40,900,000
|
|
Principal payments on revolving line of credit
|
|
|
|
(50,900,000
|
)
|
|
|
|
-
|
|
Proceeds from option exercise
|
|
|
|
|
|
112,500
|
|
|
|
|
130,000
|
|
Net Cash Provided by Financing Activities
|
|
|
|
|
15,277,171
|
|
|
|
|
91,069,853
|
|
Net Decrease in Cash
|
|
|
|
|
|
|
(2,182,343
|
)
|
|
|
|
(5,504,001
|
)
|
Cash at Beginning of Period
|
|
|
|
|
|
|
4,431,350
|
|
|
|
|
8,622,235
|
|
Cash at End of Period
|
|
|
|
|
|
$
|
2,249,007
|
|
|
|
$
|
3,118,234
|
|
Supplemental Cash flow Information
|
|
|
|
|
|
|
|
|
Cash paid for interest
|
|
|
|
|
|
$
|
564,640
|
|
|
|
$
|
174,410
|
|
Non-Cash Investing and Financing Activities
|
|
|
|
|
|
|
|
Asset retirement obligation acquired
|
|
|
|
|
-
|
|
|
|
$
|
2,177,110
|
|
Asset retirement obligation incurred during development
|
|
|
248,487
|
|
|
|
|
124,375
|
|
|
|
|
|
|
|
|
|
|
|
|
|
RECONCILIATION OF CASH FLOW FROM OPERATIONS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by operating activities
|
|
|
|
$
|
4,903,091
|
|
|
|
$
|
2,584,636
|
|
Change in operating assets and liabilities
|
|
|
|
|
3,174,420
|
|
|
|
|
8,725,110
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flow from operations
|
|
|
|
|
|
$
|
8,077,511
|
|
|
|
$
|
11,309,746
|
|
|
|
|
|
|
|
|
|
|
|
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
|
ADJUSTED EBITDA
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended
|
|
|
|
|
|
|
|
|
|
|
|
|
|
September 30,
|
|
|
September 30,
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2016
|
|
|
2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NET INCOME
|
|
|
|
|
|
|
|
|
|
|
|
|
($37,160,681
|
)
|
|
|
|
($1,579,725
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest (income)
|
|
|
|
|
|
|
|
|
|
|
|
|
(83,470
|
)
|
|
|
|
(2,613
|
)
|
Interest expense
|
|
|
|
|
|
|
|
|
|
|
|
|
597,910
|
|
|
|
|
429,742
|
|
Income tax expense (benefit)
|
|
|
|
|
|
|
|
|
|
|
|
(21,824,527
|
)
|
|
|
|
(850,621
|
)
|
Depreciation, depletion and amortization
|
|
|
|
|
|
|
|
|
|
|
8,541,981
|
|
|
|
|
11,527,684
|
|
Accretion of discounted liabilities
|
|
|
|
|
|
|
|
|
|
|
360,167
|
|
|
|
|
250,266
|
|
Ceiling test impairment
|
|
|
|
|
|
|
|
|
|
|
|
56,513,016
|
|
|
|
|
-
|
|
Share-based compensation
|
|
|
|
|
|
|
|
|
|
|
|
1,647,554
|
|
|
|
|
1,962,142
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ADJUSTED EBITDA
|
|
|
|
|
|
|
|
|
|
|
|
$
|
8,591,950
|
|
|
|
$
|
11,736,875
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
