MIDLAND, Texas--(BUSINESS WIRE)--Ring Energy, Inc. (NYSE American: REI) (“Ring”) (“Company”) today
released its operations updates for the fourth quarter and twelve months
of 2018. In the three months ended December 31, 2018, the Company
drilled 12 new horizontal wells. The Company drilled eight new
horizontal San Andres wells on its Central Basin Platform (“CBP”) asset,
one new horizontal San Andres well on its North Gaines Property and
three new horizontal Brushy Canyon wells on its Delaware Basin Property.
All wells drilled in the fourth quarter were one mile long. In the
fourth quarter, the Company finished testing and filed Initial
Potentials (“IPs”) on 12 new horizontal San Andres wells - four of which
were drilled in the fourth quarter 2018 and eight which were drilled
earlier in the year. The average IP on the 12 wells tested in the fourth
quarter 2018 was approximately 414 Barrel of Oil Equivalents (“BOE”) per
day, or 103 BOE per 1,000 feet. This compares to 15 new horizontal wells
which the Company finished testing in the third quarter of 2018, and had
average IPs of 435 BOE per day, or 103 BOE per 1,000 feet.
For the twelve months ended December 31, 2018, the Company drilled 57
new horizontal wells. The Company drilled 49 new horizontal San Andres
wells on its CBP asset, three new horizontal San Andres wells and one
horizontal test well on its North Gaines Property, and four new
horizontal Brushy Canyon wells on its Delaware Basin Property. For the
twelve months ended December 31, 2018, the Company tested and filed IPs
on 57 new horizontal wells. The average IP on the 57 wells was 432 BOE
per day, or 103 BOE per 1,000 feet.
North Gaines Property –
In the fourth quarter of 2018, the Company drilled one new horizontal
well on its North Gaines Property. The Ellen B. Peters #3H is the first
horizontal well the Company has used a “Plug and Perf” completion method
versus the “Sliding Sleeve” which was used on the previous wells. The
well was put on production in mid-November, reached a peak rate of
approximately 500 barrels of oil per day (“BOPD”), and has now leveled
off between 200 to 250 BOPD with a 35%-40% oil cut. Mr. Danny Wilson,
Ring’s Executive Vice President and Chief Operating Officer, commented,
“We are very excited with the results we have seen from all our wells on
the North Gaines property, so much so that we are including the drilling
of additional wells in the 2019 budget and have already filed for
drilling permits. The water production from the Ellen B. Peters #3H is
substantially lower than the previous wells, which we attribute to the
change in completion procedure. We are currently in the process of
implementing additional infrastructure in preparation for the on-going
drilling and development in 2019.”
Delaware Basin Property –
Three new horizontal Brushy Canyon wells were drilled in the fourth
quarter 2018. Based on the preliminary production results the Company
experienced from its first Brushy Canyon horizontal well (the Phoenix
#1H) drilled in the southwest area of the property, two of the new wells
were drilled in the northeast part of the Company’s leasehold. Mr. Danny
Wilson stated, “Our first Brushy Canyon horizontal well, the Phoenix
#1H, was drilled on the high end of the structure (southwest area) and
is producing a high percentage of natural gas. The Hugin 1H and the
Hippogriff 4H were purposely drilled lower in structure (northeast area)
in an effort to seek a thicker oil column and higher oil cuts. As a
result, the Hugin 1H was completed in mid-December and preliminary
production results have shown approximately 290 BOPD and 485 MCF per
day, which is more than double the oil production we saw from the
Phoenix 1H. Testing on the Hugin 1H continues as the fluid level is
still very high and we feel the well will get stronger as the fluid
level is reduced. The Hippogriff 4H is waiting on completion. The third
well, the Phoenix 2H, was drilled just west of the Phoenix 1H and we
expect it to be very similar based on preliminary indications gathered
through the completion process. We are very pleased with the results and
are planning additional development in 2019.”
As a result, net production for the fourth quarter of 2018, including
flared gas which is now being sold, was approximately 623,800 BOEs, as
compared to net production of 422,000 BOEs for the fourth quarter of
2017, an approximate 47.8% increase, and net production of 600,000 BOEs
for the third quarter of 2018, an approximate 4% increase. December 2018
average net production (including flared gas), was approximately 7,099
BOEs, as compared to net daily production of 5,352 BOEs in December
2017, an approximate 32.6% increase, and net daily production of 7,294
in September 2018, an approximate 2.6% decrease. For the twelve months
ended December 31, 2018, net production (including flared gas), was
approximately 2,262,800 BOEs, as compared to 1,402,000 BOEs for the
twelve months ended December 31, 2017, an approximate 61.4% increase.
Management commented that the inclusion of flared gas in the fourth
quarter and twelve-month production numbers and percentages represent a
more accurate assessment of the Company’s current operations. The total
amount of natural gas that was flared in November and December
represents approximately 15,800 BOEs and was due to a “purchaser”
infrastructure issue. The issue has been resolved and the Company’s
produced natural gas is currently being sold.
The average estimated price received per BOE in the fourth quarter 2018
was $43.50.
Mr. Kelly Hoffman, Ring’s Chief Executive Officer, stated, “2018 was
another exciting year of growth for Ring Energy. We drilled 57 new
horizontal wells in 2018. Several of them were specifically drilled in
locations to aid us in delineating structure and one was used as a
science well on our North Gaines property to test different completion
techniques. As a result, four of the wells drilled and completed in the
fourth quarter on our Central Basin Platform (“CBP”) had IP’s averaging
over 500 BOE’s per day. Preliminary results on both our North Gaines and
Delaware assets are showing improved oil production with better oil cuts
and less water. Even though we drilled and completed fewer wells in the
fourth quarter, we were still able to show increased production over the
previous quarter. Management’s goal had always been to deliver low
double-digit production growth quarter over quarter, but with a Company
of our size it is not practical to focus on one quarter’s results
instead of annualized results when temporary delays in operations
(weather, mechanical, etc.) can have an immediate impact. We are
extremely proud that we had over a 60% growth in production from 2017,
and that did not include gas which is currently being sold. We announced
in mid-December we were initiating a one rig drilling and development
program for 2019. Our focus will be on becoming cash flow neutral /
positive as soon as possible, while still producing meaningful annual
production growth. By the end of January, we will release our capital
expenditure budget (“capex”) for 2019. We have maintained a strong
balance sheet, eliminated the need to be reliant on the capital markets,
and preserved the integrity of our senior credit facility which has
allowed us to look for acquisition opportunities that complement our
existing properties and be immediately accretive to our shareholders. In
December, we announced the addition of over 5,300 acres in, around and
contiguous to our core assets on the CBP. This acreage, at a realized
price of $45 per BOE, could potentially add as much as $180 million in
PV-10 value ($2.85 per common share) and will immediately contribute to
our annualized growth by adding over two years of drilling locations to
our current inventory. While 2018 was a volatile year and brought about
many challenges, 2019 looks to be an exciting year for Ring and its
shareholders.”
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 September 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.
