MIDLAND, Texas--(BUSINESS WIRE)--Ring Energy, Inc. (NYSE American: REI) (“Company”) (“Ring”) announced
today that it has entered into a definitive agreement with Wishbone
Energy Partners, LLC and its affiliates (“Wishbone”) to acquire its
North Central Basin Platform assets located primarily in Southwest
Yoakum County, Texas and East Lea County, New Mexico. The total purchase
price for the acquisition is $300 million, comprised of $270 million of
cash and $30 million of common stock of the Company. SunTrust Bank has
provided a financing commitment letter for an increased $1 billion
senior credit facility with a borrowing base of $425 million. SunTrust
Robinson Humphrey will act as lead arranger and book manager for the
financing. The transaction is expected to close early in the second
quarter, 2019, with an effective date of November 1, 2018.
The assets consist of 49,754 gross (37,206 net) acres of mostly
contiguous leasehold. Ring will be the operator and have a 77% working
interest and a 58% net revenue interest. The acreage is adjacent to the
prolific Wasson and Brahaney fields. There is a base of 127 gross wells
currently producing an average daily net production of 6,000 Boe. The
assets are approximately 96% operated by current production volume. In
addition, current infrastructure includes 1,385 acres of owned surface
rights, 21 saltwater disposal wells, 15 source water wells, five frac
ponds and three caliche pits for road material and new locations.
Impactful, Immediately Accretive Acquisition –
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Ring’s Proved NAV/share of $7.46(1) increases to pro forma
Proved NAV/share of $11.33(2), a 52% increase.
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Doubles Production – Pro forma of 12,100 Boe/d, a 98% increase.
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Doubles Proved Reserves(3) – Pro forma of 70.9 MMBoe, a 94%
increase.
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Doubles Future EBITDA.
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Increases prospective horizontal San Andres locations by 363.
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Low projected leverage of < 2.0x by YE2019 and < 1.5x by YE2020.
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No capital markets required to fund acquisition due to increased
credit facility.
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Reassures the ability to reach future cash flow neutral/positive in
second half of 2019.
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(1)
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Proved NAV/share calculated as YE2018 Proved PV-10 based on SEC
pricing ($62.04/Bbl of oil and $3.10/Mcf of gas) less total debt
divided by current shares outstanding.
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(2)
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Pro forma Proved NAV/share calculated as pro forma YE2018 Proved
PV-10 based on SEC pricing ($62.04/Bbl of oil and $3.10/Mcf of
gas) less pro forma total debt divided by pro forma shares
outstanding.
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(3)
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Proved Reserves include PDP, PDNP and PUD.
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Mr. Kelly Hoffman, CEO of Ring stated, “We are thrilled to announce the
acquisition of these properties from Wishbone and appreciate the effort
of all parties involved. The future is very bright based on the great
results from its existing wells combined with the exceptional results we
are experiencing with our on-going drilling and development program.
This acquisition doubles our daily production, adds another 37,000 prime
acres to our horizontal footprint and nearly doubles our proved
reserves. We now have over twenty years of San Andres horizontal
drilling inventory using a 2-rig development program. We believe this
acquisition is a major step toward achieving our stated goals to
continue to generate strong annualized production growth and to become
cash flow neutral / positive by the second half of 2019. Our dedicated
team has worked tirelessly to position our Company for the future, and
with this acquisition we have built a tremendous platform that will lead
to superior results for Ring Energy and its shareholders.”
Increased Scale and Growth Potential -
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Ring Energy, Inc.
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Wishbone Energy Assets
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Pro Forma
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% Growth
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San Andres Net Acres
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76,028
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37,206
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113,234
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49
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%
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Proved Reserves (MMBoe)(1)
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36.6
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34.3
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70.9
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94
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%
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Proved Developed Reserves
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(MMBoe)
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24.6
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14.4
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39.0
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58
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%
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Proved PV-10 ($MM)
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$542
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$582
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$1,123
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107
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%
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Current Production (Boe/d)(2)
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6,100
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6,000
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12,100
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98
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%
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Gross Hz San Andres Locations
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882
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363
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1,245
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41
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%
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(1)
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Ring reserves as of 12/31/18 based on SEC pricing ($62.04/Bbl of
oil and $3.10/Mcf of gas); Wishbone reserves per Ring internal
estimates as of 12/31/18 and based on SEC pricing ($62.04/Bbl of
oil and $3.10/Mcf of gas). Proved Reserves include PDP, PDNP and
PUD; Proved Developed Reserves include PDP and PDNP.
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(2)
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Estimated January 2019 average daily production
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Prior to the Company’s 2018 Fourth Quarter and Twelve Month Financial
and Operational conference call, management will post a slide
presentation in the “Investor” section of the Company website (www.ringenergy.com)
detailing the acquisition.
Advisors
SunTrust Robinson Humphrey acted as exclusive financial advisor to Ring.
Baker Hostetler acted as legal counsel to Ring.
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.
