Ring Energy, Inc. (NYSE American: REI) (“Ring”) (“Company”)
announced today financial results for the three months and nine
months ended September 30, 2017. For the three month period ended
September 30, 2017, Ring had oil and gas revenues of $16,643,930,
compared to $7,822,543 for the quarter ended September 30, 2016.
For the nine month period ended September 30, 2017, the Company
reported oil and gas revenues of $43,391,032, compared to oil and
gas revenues of $21,019,540 for the nine month period ended
September 30, 2016.
For the three months ended September 30, 2017, Ring reported net
income of $3,073,760, or $0.06 per diluted share. For the nine
months ended September 30, 2017, the Company reported net income of
$6,263,804, or $0.12 per diluted share. This information compares
to a net loss of $5,944,137, or $0.14 per fully diluted share for
the three months ended September 30, 2016, which included a pre-tax
non-cash impairment of $9,648,942. Excluding the impairment, the
net gain per diluted share would have been $0.01. For the nine
month period ended September 30, 2016, the Company reported a net
loss of $37,160,681, or $1.00 per fully diluted share, which
included a pre-tax non-cash impairment of $56,513,016. Excluding
the impairment, the net loss per diluted share would have been
$0.04.
For the three months ended September 30, 2017, oil sales volume
increased to 346,900 barrels, compared to 174,707 barrels for the
same period in 2016, a 98.5% increase, and gas sales volume
decreased to 201,158 MCF (thousand cubic feet), compared to 229,456
MCF for the same period in 2016, a 12% decrease. For the nine
months ended September 30, 2017, oil sales volume increased to
893,562 barrels, compared to 527,010 barrels for the same period in
2016, a 69.5% increase and gas sales volume decreased to 559,551
MCF, compared to 688,196 MCF for the same period in 2016, a 19%
decrease.
The average commodity prices received by the Company were $46.17
per barrel of oil and $3.13 per MCF of natural gas for the quarter
ended September 30, 2017, compared to $40.82 per barrel of oil and
$3.01 per MCF of natural gas for the quarter ended September 30,
2016. The average prices received for the nine months ended
September 30, 2017 were $46.56 per barrel of oil and $3.19 per MCF
of natural gas, compared to $36.72 per barrel of oil and $2.42 per
MCF of natural gas for the nine month period ended September 30,
2016.
Lease operating expenses, including production taxes, for the
three months ended September 30, 2017 were $13.27 per barrel of oil
equivalent (“BOE”), a 4% increase from the prior year.
Depreciation, depletion and amortization costs, including
accretion, increased 2.5% to $12.97 per BOE. General and
administrative costs, which included a $959,715 charge for stock
based compensation, were $6.23 per BOE, a 29% decrease. For the
nine months ended September 30, 2017, lease operating expenses,
including production taxes, were $12.71 per BOE, a 1% increase.
Depreciation, depletion and amortization costs, including
accretion, were $14.04 per BOE, a 1% increase, and general and
administrative costs, which included a $2,763,007 charge for stock
based compensation, were $7.68 per BOE, an 18% decrease from
2016.
Cash provided by operating activities, before changes in working
capital, for the three and nine months ended September 30, 2017 was
$10,270,367, or $0.19 per fully diluted share, and $26,283,307, or
$0.51 per fully diluted share, compared to $3,687,847 and
$8,077,511, or $0.09 and $0.22 per fully diluted share for the same
periods in 2016. Earnings before interest, taxes, depletion and
other non-cash items (“Adjusted EBITDA”) for the three and nine
months ended September 30, 2017 was $10,184,814, or $0.19 per fully
diluted share, and $26,033,764, or $0.50 per fully diluted share,
compared to $3,777,294 and $8,591,950, or $0.09 and $0.23 in 2016.
(See accompanying table for a reconciliation of net income to
adjusted EBITDA).
In July 2017, the Company announced it had completed a public
offering of its common stock, receiving net proceeds of
approximately $59.2 million, which included the exercise of the
underwriter’s over-allotment. The proceeds from the offering are
being used to fund the Company’s 2017 capital expenditure program
and for other general corporate purposes.
In September 2017, the Company entered into two new hedging
contracts in the form of “costless collars” (“hedge”) of WTI Crude
Oil prices. The first hedge on 1,000 barrels of oil production per
day became effective October 1, 2017 and will continue through
December 31, 2017. The hedge has a floor of $49 and ceiling of
$55.35. The second hedge, also on 1,000 barrels of oil production
per day, becomes effective January 1, 2018 and continues through
December 31, 2018. The hedge has a floor of $49 and a ceiling of
$54.60. Management will continue to closely monitor market
conditions and, if commodity prices continue to improve, consider
additional hedging.
In October 2017, the Company entered into a third new hedging
contract in the form of a “costless collar” (“hedge”) of WTI Crude
Oil prices. The third hedge is also on 1,000 barrels of oil
production per day and becomes effective January 1, 2018 and
continues through December 31, 2018. The hedge has a floor of
$51.00 and a ceiling of $54.80.
There was no outstanding debt on the Company’s $500 million
senior secured credit facility at September 30, 2017.
Ring’s Chief Executive Officer, Mr. Kelly Hoffman, stated, “The
third quarter showed great results from our continued progress in
cost containment and our accelerated drilling program. We
contracted a second horizontal drilling rig in mid-August and are
extremely excited with our initial results. We have continued
making infrastructure improvements on our Central Basin Platform
and Delaware Basin assets and now have secured a dedicated fracking
crew that should keep our drilling program on track. In the third
quarter we entered into two 'hedging' contracts on a portion of our
daily production that began the first of October and run through
the end of 2018. In July, we completed a public stock offering with
the proceeds to be used on our drilling and development program. We
have a strong balance sheet, no debt, and with our dedicated staff
will continue to look for opportunities that will benefit the
Company and our shareholders.”
Non-GAAP Financial Measures:
Net income for the three months ended September 30, 2017
includes a non-cash charge for stock based compensation of
$959,715. Excluding this item, the Company’s net earnings would
have been $0.07 per diluted share. Net income for the nine months
ended September 30, 2017 includes a non-cash charge for stock based
compensation of $2,763,007. Excluding this item, the Company’s net
income would have been $0.16 per diluted share. 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.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, 2016, its Form 10-Q for
the quarter ended September 30, 2017 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 Nine Months Ended
September
30,
September
30,
2017 2016 2017
2016
(Unaudited)
(Unaudited)
(Unaudited)
(Unaudited)
Oil and Gas Revenues $ 16,643,930
$ 7,822,543 $ 43,391,032 $
21,019,540
Costs and Operating Expenses Oil
and gas production costs 4,261,923 2,329,228 10,481,669 7,019,771
Oil and gas production taxes 787,777 389,029 2,062,215 1,032,335
Depreciation, depletion and amortization 4,823,044 2,568,153
13,433,489 8,541,981 Ceiling test impairment - 9,648,942 -
56,513,016 Accretion expense 109,974 125,813 420,723 360,167
General and administrative expense 2,369,131
1,882,579 7,576,391
6,023,038
Total Costs and Operating
Expenses 12,351,849
16,943,744 33,974,487
79,490,308
Income (Loss) from Operations
4,292,081 (9,121,201 )
9,416,545 (58,470,768 )
Other
Income Interest expense - (95,864 ) - (597,910 ) Interest
income 85,553 6,417 249,543 83,470 Gain on change in fair value of
derivatives 65,828 -
65,828 -
Net
Other Income 151,381 (89,447
) 315,371 (514,440 )
Income (Loss) Before Tax Provision 4,443,462 (9,210,648 )
9,731,916 (58,985,208 )
(Provision For) Benefit From
Income Taxes (1,369,702 ) 3,266,511
(3,468,112 ) 21,824,527
Net Income (Loss) $ 3,073,760
($5,944,137 ) $ 6,263,804
($37,160,681 )
Basic Net Income (Loss) Per Common
Share $ 0.06 ($0.14 ) $ 0.12 ($1.00 )
Diluted Net Income
(Loss) Per Common Share $ 0.06 ($0.14 ) $ 0.12 ($1.00 )
Basic Weighted-Average Common Shares Outstanding
53,009,696 41,917,061 50,441,375 36,996,932
Diluted
Weighted-Average Common Shares Outstanding 54,367,648
41,917,061 51,760,109 36,996,932
COMPARATIVE OPERATING STATISTICS Three
Months Ended September 30, 2017 2016 Change Net Sales - BOE
per day 4,135 2,315 79 % Per BOE: Average Sales Price $ 43.75 $
36.73 19 % Lease Operating Expenses $ 11.20 $ 10.94 2 %
Production Taxes $ 2.07 $ 1.83 13 % DD&A $ 12.68 $ 12.06 5 %
Accretion $ 0.29 $ 0.59 -51 % General & Administrative Expenses
$ 6.23 $ 8.84 -29 % Nine Months Ended September 30, 2017
2016 Change Net Sales - BOE per day 3,615 2,342 54 % Per
BOE: Average Sales price $ 43.97 $ 32.76 34 % Lease
Operating Expenses $ 10.62 $ 10.94 -3 % Production Taxes $ 2.09 $
1.61 30 % DD&A $ 13.61 $ 13.31 2 % Accretion $ 0.43 $ 0.56 -23
% General & Administrative Expenses $ 7.68 $ 9.39 -18 %
RING ENERGY, INC. CONSOLIDATED
BALANCE SHEET September 30, December 31,
2017
2016
ASSETS Current Assets Cash $ 40,876,153 $
71,086,381 Accounts receivable 7,634,987 3,453,238 Joint Interest
billing receivable 877,246 454,461 Prepaid expenses and retainers
327,112 226,835
Total Current
Assets 49,715,498 75,220,915
Property and Equipment Oil and gas properties subject to
amortization 373,837,454 250,133,965 Inventory for property
development 1,033,806 1,582,427 Fixed assets subject to
depreciation 1,858,528 1,549,311
Total Property and Equipment 376,729,788 253,265,703
Accumulated depreciation, depletion and amortization
(54,780,641 ) (41,347,152 )
Net Property and
Equipment 321,949,147 211,918,551
Deferred Income Taxes 18,180,259 20,051,908
Derivative
Assets 65,828 -
Deferred Financing Costs 203,013
406,025
Total Assets $ 390,113,745
$ 307,597,399
LIABILITIES AND STOCKHOLDERS'
EQUITY Current Liabilities Accounts payable $ 21,225,911
$ 9,099,391 Asset retirement obligations $ 414,000 -
Total Current Liabilities 21,639,911
9,099,391 Asset retirement obligations
8,205,194 7,957,035
Total Liabilities
29,845,105 17,056,426
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; 54,145,901 shares and 49,113,063
shares outstanding, respectively
54,146 49,113 Additional paid-in capital 397,060,212 335,197,845
Retained Loss (36,845,718 ) (44,705,985 )
Total
Stockholders' Equity 360,268,640
290,540,973
Total Liabilities and Stockholders'
Equity $ 390,113,745 $ 307,597,399
RING ENERGY, INC.
STATEMENTS OF CASH FLOW
Nine Months Ended September 30,
2017
2016
Cash Flows From Operating Activities Net Income
(loss) $ 6,263,804 ($37,160,681 )
Adjustments to reconcile net loss to net
cash used in operating activities:
Depreciation, depletion and amortization 13,433,489 8,541,981
Ceiling test impairment - 56,513,016 Accretion expense 420,723
360,167 Share-based compensation 2,763,007 1,647,554 Deferred
income tax provision (benefit) 3,383,131 (21,824,526 ) Excess tax
deficiency (benefit) related to share-based compensation 84,981 -
Change in fair value of derivative instruments (65,828 ) - Changes
in assets and liabilities: Accounts receivable (4,604,534 ) 560,467
Prepaid expenses and retainers 102,735 162,726 Accounts payable
7,126,520 (3,897,613 ) Settlement of asset retirement obligation
(605,432 ) (7,817 )
Net Cash
Provided by (Used in) Operating Activities 28,302,596
4,895,274
Cash Flows from
Investing Activities Payments to purchase oil and natural gas
properties (26,915,783 ) (6,154,997 ) Payments to develop oil and
natural gas properties (87,576,052 ) (16,190,471 ) Purchase of
inventory for development (2,816,165 ) - Purchase of equipment,
vehicles and leasehold improvements (309,217 )
(9,320 )
Net Cash Used in Investing Activities
(117,617,217 ) (22,362,605 )
Cash Flows
From Financing Activities Proceeds from issuance of common
stock 59,104,393 61,064,671 Proceeds from issuance of notes payable
- 5,000,000 Principal payments on revolving line of credit -
(50,900,000 ) Proceeds from option exercise -
112,500
Net Cash Provided by Financing
Activities 59,104,393
15,277,171
Net Decrease in Cash (30,210,228 )
(2,182,343 )
Cash at Beginning of Period 71,086,381
4,431,350
Cash at End of
Period $ 40,876,153 $ 2,249,007
Supplemental Cash flow Information Cash paid for interest
- 564,640
Non-Cash
Investing and Financing Activities Asset retirement obligation
incurred during development 846,868 248,487 Use of inventory in
property development 3,364,786 -
Capitalized expenditures attributable to
drilling projects financed through current liabilities
$ 5,000,000 -
RECONCILIATION OF CASH FLOW FROM
OPERATIONS Net cash provided by operating activities $
28,302,596 $ 4,895,274 Change in operating assets and liabilities
(2,019,289 ) 3,182,237
Cash flow from operations $ 26,283,307 $
8,077,511
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 Nine
Months Ended September 30, September 30,
2017
2016
NET INCOME $ 6,263,804 ($37,160,681 ) Interest
(income) (249,543 ) (83,470 ) Interest expense - 597,910 Loss
(Gain) on change in fair value of derivatives (65,828 ) - Income
tax expense (benefit) 3,468,112 (21,824,527 ) Depreciation,
depletion and amortization 13,433,489 8,541,981 Accretion of
discounted liabilities 420,723 360,167 Ceiling test impairment -
56,513,016 Share-based compensation 2,763,007
1,647,554
ADJUSTED EBITDA $ 26,033,764
$ 8,591,950
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version on businesswire.com: http://www.businesswire.com/news/home/20171108006566/en/
K M Financial, Inc.Bill Parsons, 702-489-4447
Ring Energy (AMEX:REI)
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