Ring Energy Announces Financial and Operating Results for First Quarter 2016

Monday, May 9, 2016 3:19 pm CDT

Dateline:

MIDLAND, Texas

Public Company Information:

NYSEMKT:
REI

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
 

Contact:

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

Stock Information

NYSE American: REI Change: 
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Investor Contact

Bill Parsons
901 W. Wall St. Suite 300
Midland, TX 79701
Phone: 702.489.4447
k-m-financial@msn.com

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