Ring Energy Inc. Announces Second Quarter and Six Month 2015 Financial and Operating Results

Monday, August 10, 2015 5:42 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 three months and six months ended June 30, 2015. For the three month period ended June 30, 2015, Ring had oil and gas revenues of $8,976,790, compared to $11,204,238 for the quarter ended June 30, 2014, and net income of $534,167, or $0.02 per fully diluted share, compared to net income of $2,821,738, or $0.11 per fully diluted share, for the same period in 2014. For the six month period ended June 30, 2015, the Company reported oil and gas revenues of $15,022,491, compared to oil and gas revenues of $17,174,690 for the six month period ended June 30, 2014. The Company had a net loss for the six month period ended June 30, 2015 of $441,457, or $0.02 per fully diluted share, compared to net income of $3,985,427, or $0.16 per fully diluted share, for the same period in 2014. The revenue decrease was a result of lower oil and gas prices received.

For the three months ended June 30, 2015, oil sales volume increased to 165,759 barrels, compared to 118,533 barrels for the same period in 2014, a 40% increase, and gas sales volume increased to 94,517 MCF (thousand cubic feet), compared to 7,142 MCF for the same period in 2014, a 1,223% increase. For the six months ended June 30, 2015, oil sales volume increased to 302,848 barrels, compared to 182,477 barrels for the same period in 2014, a 66% increase, and gas sales volume increased to 114,364 MCF, compared to 15,759 MCF for the same period in 2014, a 626% increase.

The average commodity prices received by Ring were $52.52 per barrel of oil and $2.87 per MCF of natural gas for the quarter ended June 30, 2015, compared to $94.22 per barrel of oil and $4.98 per MCF of natural gas for the quarter ended June 30, 2014. The average prices received for the six months ended June 30, 2015 were $48.55 per barrel of oil and $2.78 per MCF of natural gas, compared to $93.69 per barrel of oil and $4.93 per MCF of natural gas for the six month period ended June 30, 2014.

Lease operating expenses, including production taxes, for the three months ended June 30, 2015 were $14.48 per barrel of oil equivalent (“BOE”). Depreciation, depletion and amortization costs were $17.66 per BOE, and general and administrative costs, which included a $656,486 charge for stock based compensation, were $11.26 per BOE. For the six months ended June 30, 2015, lease operating expenses, including production taxes, were $14.83 per BOE. Depreciation, depletion and amortization costs were $21.31 per BOE, and general and administrative costs, which included a $1,311,174 charge for stock based compensation, were $11.72 per BOE.

Net cash flow from operations for the three and six months ended June 30, 2015 was $4,960,605, or $0.18 per fully diluted share, and $7,787,181, or $0.30 per fully diluted share, compared to net cash flow of $8,614,602, or $0.34, and $12,633,000, or $0.51 per fully diluted share for the same periods in 2014 (1).

In June 2015, the Company received approximately $49 million in net proceeds from the public sale of 4,500,000 shares of the Company’s registered common stock. Also in June, the Company entered into a new five-year, $500 million senior credit facility, increased from $150 million, with an immediate borrowing base of $100 million, increased from $40 million. There was an outstanding balance of $40.9 million on the Company’s $500 million senior secured credit facility at June 30, 2015.

On June 30, 2015, the Company announced it had finalized the acquisition of Delaware Basin acreage located in Culberson and Reeves Counties, Texas for a purchase price of $75 million. The acquisition was financed with proceeds from the Company’s June 2015 public common stock offering and the Company’s new senior credit facility.

Internal estimates of net 3P reserves (Proved, Probable and Possible), including the recent Delaware Basin acquisition, as of June 30, 2015, were 24.677 million barrel of oil equivalents (BOE) Proved, 10.521 million BOE Probable and 8.152 million BOE Possible for a 3P total of 43.35 million BOE. Future net revenues before income taxes, discounted at 10% (“PV-10”), based on $55.00 per barrel of oil and $3.50 per MCF of gas, were $292.764 million Proved, $106.351 million Probable and $37.049 million Possible for a 3P total of $436.164 million.

Ring’s Chief Executive Officer, Mr. Kelly Hoffman, stated, “We have firmly believed that an extended environment of low commodity prices would offer acquisition opportunities for companies like ours, which have been diligent in reducing costs and maintaining a strong balance sheet. Our recent acquisition of 14,700 acres in the Delaware Basin is a prime example. This addition has significantly increased our net acreage in Texas, added over 400 potential drilling locations and substantially enhanced our daily production. Our field personnel are doing an excellent job in the renovation of the present infrastructure, resulting in cost reduction and additional production. We are ready to resume development activity once prices improve and continue to look for additional acquisition opportunities that complement our existing properties.”

Non-GAAP Financial Measures:

Earnings for the three months ended June 30, 2015 include a non-cash charge for stock based compensation of $656,486. Earnings for the six months ended June 30, 2015 include a non-cash charge for stock based compensation of $1,311,174. Excluding such items, the Company’s earnings would have been $0.03 per diluted share for the three months ended June 30, 2015, and $0.01 for the six months ended June 30, 2015. 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.

(1)   Cash Flow from Operations is a non-GAAP financial measure that represents “Net Cash Provided By Operating Activities” adjusted for the change in operating assets and liabilities. See below for a reconciliation of the related amounts.

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, its Form 10-Q for the quarter ended June 30, 2015 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 Six Months Ended
June 30, June 30,
2015 2014 2015 2014
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
 
Oil and Gas Revenues $ 8,976,790   $ 11,204,238   $ 15,022,491   $ 17,174,690  
 
Costs and Operating Expenses
Oil and gas production costs 2,206,057 1,077,878 4,073,852 1,848,978
Oil and gas production taxes 422,884 517,052 699,915 793,013
Depreciation, depletion and amortization 3,205,033 3,477,816 6,859,331 5,008,012
Accretion expense 79,400 37,312 146,379 61,694
General and administrative expense   2,043,730     1,634,807     3,772,717     3,199,268  
 
Total Costs and Operating Expenses   7,957,104     6,744,865     15,552,194     10,910,965  
 
Income (Loss) from Operations   1,019,686     4,459,373     (529,703 )   6,263,725  
 
Other Income
Interest expense (79,005 ) (79,005 )
Interest income   2     19,576     782     62,349  
 
Net Other Income   (79,003 )   19,576     (78,223 )   62,349  
 
Income (Loss) Before Provision for Income Taxes 940,683 4,478,949 (607,926 ) 6,326,074
 
(Provision For) Benefit From Income Taxes   (406,516 )   (1,657,211 )   166,469     (2,340,647 )
 
Net Income (Loss) $ 534,167   $ 2,821,738     ($441,457 ) $ 3,985,427  
 
Basic Net Income (Loss) Per Common Share $ 0.02 $ 0.12 ($0.02 ) $ 0.17
Diluted Net Income (Loss) Per Common Share $ 0.02 $ 0.11 ($0.02 ) $ 0.16
 
 
Basic Weighted-Average Common Shares Outstanding 26,121,822 23,907,651 25,935,204 23,745,406
Diluted Weighted-Average Common Shares Outstanding 27,172,598 25,151,932 25,935,204 24,926,088
 
 
COMPARATIVE OPERATING STATISTICS
       
Three Months Ended June 30,
2015 2014 Change
 
Net Production - BOE per day 1,995 1,316 52 %
Per BOE:
Average Sales Price $ 49.46 $ 93.58 -47 %
 
Operating Costs (excluding production taxes) $ 12.15 $ 9.00 35 %
DD&A $ 17.66 $ 29.05 -39 %

General & Administrative Expenses

$ 11.26 $ 13.65 -18 %
 
Six Months Ended June 30,
2015 2014 Change
 
Net Production - BOE per day 1,779 1,023 74 %
Per BOE:
Average Sales price $ 46.67 $ 92.78 -50 %
 
Operating Costs $ 12.66 $ 9.99 27 %
DD&A $ 21.31 $ 27.06 -21 %

General & Administrative Expenses

$ 11.72 $ 17.28 -32 %
 
 
Net Oil and Gas Reserves*
As of June 30, 2015
                 
Crude Oil Nat. Gas Total PV-10
(MMBbls) (MMcf) (MMBOE) (MM$)
 
Proved Developed Reserves 7.391 6.503 8.474 141.791
 
Proved Developed Non-Producing 0.902 1.287 1.117 20.778
 
Proved Undeveloped Reserves 12.949 12.821 15.086 130.195
 
Total Proved Reserves 21.242 20.611 24.677 292.764
 
Total Probable Reserves 9.901 3.722 10.521 106.351
 
Total Possible Reserves 7.244 5.448 8.152 37.049
 
Total 3P Reserves 38.387 29.781 43.35 436.164
 
*Note: Internal Estimates based on $55.00 per barrel of oil / $3.50 per Mcf of natural gas
 
 
RING ENERGY, INC.
CONSOLIDATED BALANCE SHEET
       
June 30, December 31,
2015 2014
 
ASSETS
Current Assets
Cash $ 5,767,566 $ 8,622,235
Accounts receivable 4,020,660 3,616,676
Joint Interest billing receivable 2,627,771 2,683,787
Prepaid expenses and retainers   1,175,483     160,600  
Total Current Assets   13,591,480     15,083,298  
Property and Equipment, Using Full Cost Accounting
Oil and gas properties subject to amortization 257,757,735 166,036,400
Office equipment and automobiles   1,525,848     1,209,809  
Total Property and Equipment 259,283,583 167,246,209
Accumulated depreciation, depletion and amortization   (21,547,378 )   (14,688,047 )
Net Property and Equipment   237,736,205     152,558,162  
Total Assets $ 251,327,685   $ 167,641,460  
 
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Accounts payable $ 6,999,288 $ 16,241,022
Other accrued liabilities   -     22,029  
Total Current Liabilities   6,999,288     16,263,051  
 
Deferred income taxes 4,772,921 4,939,390
Long term debt 40,900,000 -
Asset retirement obligations   6,264,985     3,896,489  
Total Liabilities   58,937,194     25,098,930  
 
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;
30,276,342 shares and 25,734,467 shares outstanding, respectively 30,276 25,734
Additional paid-in capital 190,817,199 140,532,323
Retained Earnings   1,543,016     1,984,473  
Total Stockholders' Equity   192,390,491     142,542,530  
Total Liabilities and Stockholders' Equity $ 251,327,685   $ 167,641,460  
 
 
RING ENERGY, INC.
STATEMENTS OF CASH FLOW
         
Six Months Ended
June 30,
2015 2014
 
Cash Flows From Operating Activities
Net income ($441,457 ) $ 3,985,427
Adjustments to reconcile net income (loss) to net cash
provided by (used in) operating activities:
Depreciation, depletion and amortization 6,859,331 5,008,012
Accretion expense 146,379 61,694
Share-based compensation 1,311,174 1,299,569
(Benefit from) Provision for income taxes (166,469 ) 2,340,647
Changes in assets and liabilities:
Accounts receivable (347,968 ) (892,225 )
Prepaid expenses (1,014,883 ) (193,045 )
Accounts payable   (9,263,763 )   1,422,697  
Net Cash Provided by (Used in) Operating Activities   (2,917,656 )   13,032,776  
Cash Flows from Investing Activities
Payments to purchase oil and natural gas properties (76,683,890 ) (10,974,396 )
Payments to develop oil and natural gas properties (12,815,328 ) (37,324,033 )
Purchase of office equipment   (316,039 )   (239,210 )
Net Cash Used in Investing Activities   (89,815,257 )   (48,537,639 )
Cash Flows From Financing Activities
Proceeds from option exercise 62,500 22,500
Proceeds from issuance of common stock 48,915,744 28,667,132
Proceeds from issuance of notes payable   40,900,000     -  
Net Cash Provided by Financing Activities   89,878,244     28,689,632  
Net Increase (Decrease) in Cash (2,854,669 ) (6,815,231 )
Cash at Beginning of Period   8,622,235     52,350,583  
Cash at End of Period $ 5,767,566   $ 45,535,352  
 
Non-Cash Investing and Financing Activities
Asset retirement obligation acquired $ 2,177,110 $ 294,772
Asset retirement obligation incurred during development   45,007     737,969  
 
RECONCILIATION OF CASH FLOW FROM OPERATIONS
 
Net cash provided by operating activities ($2,917,656 ) $ 13,032,776
Change in operating assets and liabilities   10,626,614     (337,427 )
 
Cash flow from operations $ 7,708,958   $ 12,695,349  
 
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
         
Six Months Ended
June 30, June 30,
2015 2014
 
NET INCOME ($441,457 ) $ 3,985,427
 
Interest expense (Income) 78,223 (62,349 )
Income tax expense (166,469 ) 2,340,647
Depreciation, depletion and amortization 6,859,331 5,008,012
Accretion expense 146,379 61,694
Share-based compensation   1,311,174     1,299,569  
 
ADJUSTED EBITDA $ 7,787,181   $ 12,633,000  

Contact:

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

Stock Information

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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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