Ring Energy Announces Financial and Operational Results for Fourth Quarter and Year End 2014

2014 Revenues Increase 269%
Fourth Quarter Revenues Increase 98%
Proved Reserves Increase 43%

Monday, March 16, 2015 3:23 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 fourth quarter and year ended December 31, 2014.

Ring had net income of $2,708,604, a 76% increase, on oil and gas revenues of $9,984,982, a 98% increase, for the fourth quarter compared to net income of $1,534,957 on revenues of $5,051,434 for the fourth quarter ended December 31, 2013. For the year ended December 31, 2014, Ring had net income of $8,420,500 on revenues of $38,089,443, as compared to a loss of $452,209 on revenues of $10,315,701 for the year ended December 31, 2013. Income attributable to common shares for the fourth quarter was $0.10 per diluted share compared to $0.08 for the fourth quarter ended December 31, 2013. For the year ended December 31, 2014, the income attributable to common shares was $0.33 per diluted share compared to a loss of $0.03 per diluted share for the year ended December 31, 2013.

The increase in revenue is attributed to an increase in production, primarily due to development activities. For the three months ended December 31, 2014, oil sales volume increased to 150,036 barrels, compared to 54,557 barrels for the same period in 2013, and gas sales volume increased to 14,784 MCF (thousand cubic feet), compared to 13,607 MCF for the same period in 2013. For the twelve months ended December 31, 2014, oil sales volume increased to 457,039 barrels, compared to 109,673 barrels for the same period in 2013, and gas sales volume increased to 38,735 MCF, compared to 36,047 MCF for the same period in 2013. The average commodity prices received by Ring were $66.39 per barrel of oil and $2.36 per MCF of natural gas for the quarter ended December 31, 2014, compared to $91.41 per barrel of oil and $4.72 per MCF of natural gas for the quarter ended December 31, 2013. The average prices received for the twelve months ended December 31, 2014 were $83.06 per barrel of oil and $3.53 per MCF of natural gas, compared to $92.81 per barrel of oil and $3.82 per MCF of natural gas for the twelve month period ended December 31, 2013. In January, the company stated that net production for the fourth quarter was approximately 155,100 BOE (Barrel of Oil Equivalent). Total net sales production for the fourth quarter of 2014 was 152,500 BOE, as compared to 56,825 BOE for the same period in 2013, an increase of 168%. The remaining fourth quarter production that was not sold in 2014 was held in storage and sold in the first quarter of 2015. Net sales production for the full year 2014 was 463,495 BOE, compared to 115,681 BOE in 2013, an increase of 301%.

Lease operating expenses, including production taxes, for the three months ended December 31, 2014 were $14.82 per barrel of oil equivalent (“BOE”). Depreciation, depletion and amortization costs, including accretion, were $15.45 per BOE. General and administrative costs, which included a $586,876 charge for stock based compensation, were $11.72 per BOE. For the twelve months ended December 30, 2014, lease operating expenses, including production taxes, were $14.57 per BOE. Depreciation, depletion and amortization costs, including accretion, were $25.81 per BOE, and general and administrative costs, which included a $2,517,211 charge for stock based compensation, were $14.68 per BOE.

Cash provided by operating activities, before changes in working capital, for the three and twelve months ended December 31, 2014 was $6,532,258, or $0.24 per fully diluted share, and $27,223,267, or $1.05 per fully diluted share, compared to $3,246,839 and $5,552,286, or $0.16 and $0.34 per fully diluted share for the same periods in 2013. Earnings before interest, taxes, depletion and other non-cash items (“Adjusted EBITDA”) for the three and twelve months ended December 31, 2014 was $6,611,916, or $0.25 per fully diluted share, and $27,137,303, or $1.05 per fully diluted share, compared to $3,244,263 and $5,537,470, or $0.16 and $0.34 in 2013. (See accompanying table for a reconciliation of net income to adjusted EBITDA.)

There was no outstanding debt on the Company’s $150 million senior secured credit facility at January 1, 2015.

Proved reserves, as determined by Cawley, Gillespie and Associates, totaled 10,407,009 barrel of oil equivalents (BOE), a 43% increase over the 7,270,163 BOE for the previous year. Future net revenues before income taxes, discounted at 10% (“PV-10”), based on $85.10 per barrel of oil and $3.95 per MCF of gas, were $281.7 million at year-end 2014. This compared to $198.4 million, using average prices of $92.54 per barrel of oil and $5.88 per MCF of gas, for year-end 2013.

Mr. Kelly Hoffman, the Company’s Chief Executive Officer, stated, “As we stated in our operations update on January 29th, we returned the three drilling rigs we had working on our Permian Basin properties and discontinued all drilling activity due to the rapid drop in commodity prices. Our staff has, and continues to work very hard with all our vendors and service providers to cut the costs of services and supplies. We drilled 135 new development wells in 2014 and are ready to resume our drilling activity once we see prices stabilize. We continue to be patient. We have the benefit of a strong balance sheet and will continue to evaluate acquisition opportunities we feel could increase our production, reserves, and ultimately, shareholder value.”

Non-GAAP Financial Measures:

Earnings for the three months ended December 31, 2014 include a non-cash charge for stock based compensation of $586,876. Earnings for the twelve months ended December 31, 2014 include a non-cash charge for stock based compensation of $2,517,211. Excluding such items, the Company’s earnings would have been $0.12 per diluted share for the three months ended December 31, 2014, and $0.39 for the twelve months ended December 31, 2014. 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, 2014. 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 Twelve Months Ended

December 31,

December 31,

2014

2013

2014

2013

 
Oil and Gas Revenues $ 9,984,982     $ 5,051,434   $ 38,089,443     $ 10,315,701  
 
Costs and Operating Expenses
Oil and gas production costs 1,796,259 560,624 4,993,166 1,207,529
Oil and gas production taxes 463,102 233,344 1,760,206 476,964
Depreciation, depletion and amortization 2,304,914 626,705 11,807,794 2,284,091
Asset retirement obligation accretion 50,731 16,498 154,973 53,681
General and administrative expense   1,787,630       2,004,179     6,803,029       6,682,760  
 
Total Costs and Operating Expenses   6,402,636       3,441,350     25,519,168       10,705,025  
 
Income (Loss) from Operations 3,582,346 1,610,084 12,570,275 (389,324 )
 
Other Income (Expense)
Interest income 7,391 12,464 85,964 24,706
Interest expense   -       (9,890 )   -       (9,890 )
 
Net Other Income   7,391       2,574     85,964       14,816  
 
Income (Loss) Before Provision for Income Taxes 3,589,737 1,612,658 12,656,239 (374,508 )
 
Provision for Income Taxes   (881,133 )     (77,701 )   (4,235,739 )     (77,701 )
 
Net Income (Loss) $ 2,708,604     $ 1,534,957   $ 8,420,500       ($452,209 )
 
Basic Earnings (Loss) Per Common Share $ 0.10 $ 0.08 $ 0.34 ($0.03 )
Diluted Earnings (Loss) Per Common Share $ 0.10 $ 0.08 $ 0.33 ($0.03 )
 
 
     

For the years ended December 31,

  2014       2013  
Net Income (Loss) $ 7,974,956       ($452,209 )
Basic Weighted-Average Shares Outstanding 24,739,795 16,376,911
Diluted Weighted-Average Shares Outstanding 25,890,285 16,376,911
Basic Earnings (Loss) per Share $ 0.32 ($0.03 )
Diluted Earnings (Loss) per Share $ 0.31 ($0.03 )
 
       
COMPARATIVE OPERATING STATISTICS
 
Three Months Ended December 31,
2014 2013 Change
 
Net Production - BOE per day 1,658 618 168 %
Per BOE:
Average Sales Price $ 65.48 $ 88.89 -26 %
 
Lease Operating Expenses 11.78 9.87 19 %
Production Taxes 3.04 4.11 -26 %
DD&A 15.11 11.03 37 %
General & Administrative Expenses 11.72 35.27 -67 %
 
Twelve Months Ended December 31,
2014 2013 Change
 
Net Production - BOE per day 1,270 317 301 %
Per BOE:
Average Sales price $ 82.18 $ 89.17 -8 %
 
Lease Operating Expenses 10.77 10.44 3 %
Production Taxes 3.80 4.12 -8 %
DD&A 25.48 19.74 29 %

General & Administrative Expenses

14.68 57.77 -75 %
 
 
RING ENERGY, INC.
CONSOLIDATED BALANCE SHEET
 
December 31,

 

December 31,

2014

2013

 
ASSETS
Current Assets
Cash $ 8,622,235 $ 52,350,583
Accounts receivable 3,616,676 3,888,402
Joint interest billing receivable 2,683,787 -
Prepaid expenses and retainers   160,600     66,051  
Total Current Assets   15,083,298     56,305,036  
Property and Equipment
Oil and natural gas properties subject to amortization 166,036,400 58,040,724
Office equipment   1,209,809     257,911  
Total Property and Equipment   167,246,209   58,298,635
Less: Accumulated depreciation and amortization (14,688,047 ) (2,880,253 )
Net Property and Equipment   152,558,162     55,418,382  
Total Assets $ 167,641,460   $ 111,723,418  
 
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Accounts payable $ 16,241,022 $ 6,229,490
Other accrued liabilities   22,029     1,002,153  
Total Current Liabilities   16,263,051     7,231,643  
Deferred income taxes 4,939,390 703,651
Asset retirement obligation   3,896,489     1,182,410  
Total Liabilities   25,098,930     9,117,704  
 
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;
25,734,467 shares and 23,576,313 shares outstanding, respectively 25,734 23,576
Additional paid-in capital 140,532,323 109,018,165
Accumulated income (deficit)   1,984,473     (6,436,027 )
Total Stockholders' Equity   142,542,530     102,605,714  
Total Liabilities and Stockholders' Equity $ 167,641,460   $ 111,723,418  
 
   
RING ENERGY, INC.
STATEMENTS OF CASH FLOW
 

 

December 31,

 

December 31,

2014

2013

 
Cash Flows From Operating Activities
Net income (loss) $ 8,420,500 ($452,209 )
Adjustments to reconcile net income (loss) to net cash
Provided by operating activities:
Depreciation, depletion and amortization 11,807,794 2,284,091
Accretion expense 154,973 53,681
Share-based compensation 2,517,211 3,489,022
Stock issued for services 87,050 100,000
Deferred income tax expense (benefit) 4,235,739 77,701
Changes in assets and liabilities:
Accounts receivable (2,412,061 ) (3,470,437 )
Prepaid expenses (94,549 ) (5,653 )
Accounts payable   9,031,408     6,040,212  
Net Cash Provided by Operating Activities   33,748,065     8,116,408  
Cash Flows from Investing Activities
Payments to purchase oil and natural gas properties (15,054,649 ) (5,192,441 )
Payments to develop oil and natural gas properties (90,160,236 ) (29,103,392 )
Purchase of equipment, vehicles and leasehold improvements (951,898 ) (82,805 )
Plugging and abandonment cost incurred   (39,316 )   (60,544 )
Net Cash Used in Investing Activities   (106,206,099 )   (34,439,182 )
Cash Flows From Financing Activities
Proceeds from issuance of common stock 28,514,686 73,201,690
Proceeds from option exercise   215,000     67,500  
Net Cash Provided by Financing Activities   28,729,686     73,269,190  
Net Increase (Decrease) in Cash (43,728,348 ) 46,946,416
Cash at Beginning of Period   52,350,583     5,404,167  
Cash at End of Period $ 8,622,235   $ 52,350,583  
 
Supplemental Cash flow Information
Cash paid for interest   -   $ 9,890  
 
Noncash Investing and Financing Activities
Asset retirement obligation assumed 575,977 -
Revision of asset retirement obligation estimate - 211,691
Asset retirement obligation incurred during development 2,022,445 481,296
Payments with Ring Energy, Inc. shares   182,369     -  
 
 
 
RECONCILIATION OF CASH FLOW FROM OPERATIONS
 
Net cash provided by operating activities $ 33,748,065 $ 8,116,408
Change in operating assets and liabilities   6,524,798     2,564,122  
 
Cash flow from operations $ 27,223,267   $ 5,552,286  
 

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
 
 
December 31, December 31,

2014

2013

 
NET INCOME $ 8,420,500 ($452,209 )
 
Interest (income) (85,964 ) (24,706 )
Interest expense - 9,890
Income tax expense 4,235,739 77,701
Depreciation, depletion and amortization 11,807,794 2,284,091
Accretion of discounted liabilities 154,973 53,681
Stock based compensation 2,517,211 3,489,022
Stock issued as finders fee   87,050     100,000  
 
ADJUSTED EBITDA $ 27,137,303   $ 5,537,470  
 

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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