Ring Energy Announces the Closing of the Founders Oil & Gas Permian Basin Assets Acquisition
16 August 2023 - 8:45PM
Ring Energy, Inc. (NYSE American: REI) (“Ring” or the “Company”)
today announced it has completed its previously announced
acquisition (the “Transaction”) of the Central Basin Platform
(“CBP”) assets of Founders Oil & Gas IV, LLC (“Founders”).
Founders’ CBP operations are located in the Permian Basin in Ector
County, Texas and are focused on the development of approximately
3,600 net acres that are similar to Ring’s CBP assets acquired in
2022 from Stronghold Energy Operating II, LLC and its affiliate
(“Stronghold”).
KEY HIGHLIGHTS
- Immediately
accretive to Ring’s production, reserves and Adjusted Free Cash
Flow(1);
- Accelerates
Ring’s ability to pay down debt; and
- Further
increases Ring’s inventory of low-risk, high rate-of-return
drilling locations, allowing capital allocation flexibility for
Ring.
Mr. Paul D. McKinney, Chairman of the Board and
Chief Executive Officer, commented, “We are pleased to inform our
shareholders that we closed our previously announced acquisition of
Founders Oil & Gas CBP assets on August 15, 2023. This
Transaction complements our conventional-focused CBP asset position
in the Permian Basin with assets that are similar to the CBP assets
we acquired in the third quarter of last year. Our near-term focus
is to quickly integrate these operations into our business, while
at the same time formalizing detailed development plans for the
acquired assets. Similar to our other inventory in the area, these
assets have stacked pay zones of high-quality rock with proven
performance. We intend to leverage our extensive expertise applying
the newest conventional and unconventional technologies to
optimally develop the acquired inventory of undeveloped drilling
locations. In summary, we view this acquisition as another example
of creating value through our value focused proven strategy and
further positions the Company to deliver on our long-term goals for
our shareholders.”
TRANSACTION CONSIDERATION
After taking into account preliminary closing
adjustments for interim cash flow based on the effective date of
April 1, 2023 and other customary items, consideration for the
Transaction consisted of:
- A cash deposit
of $7.5 million paid on July 11, 2023;
- A cash payment
of approximately $42.5 million at closing; and
- A deferred cash
payment of $15.0 million due on or about December 15, 2023.
The cash payment at closing was funded with
borrowings under Ring’s senior revolving credit facility.
ADVISORS
Raymond James acted as exclusive financial
advisor and Jones & Keller, P.C. provided legal counsel to
Ring. TenOaks Energy Advisors served as exclusive financial and
technical advisor and O’Melveny & Myers LLP provided legal
counsel to Founders.
ABOUT RING ENERGY, INC.
Ring Energy, Inc. is an oil and gas exploration,
development, and production company with current operations focused
on the development of its Permian Basin assets. For additional
information, please visit www.ringenergy.com.
SAFE HARBOR STATEMENT
This release contains forward-looking statements
within the meaning of Section 27A of the Securities Act of 1933 and
Section 21E of the Securities Exchange Act of 1934. Forward-looking
statements involve a wide variety of risks and uncertainties, and
include, without limitation, statements with respect to the
Company’s strategy and prospects. The forward-looking statements
include statements about the expected benefits of the Transaction
to Ring and its shareholders, the expected future reserves,
production, financial position, business strategy, revenues,
earnings, costs, capital expenditures and debt levels of the
Company, and plans and objectives of management for future
operations. Forward-looking statements are based on current
expectations and assumptions and analyses made by Ring and its
management in light of their experience and perception of
historical trends, current conditions and expected future
developments, as well as other factors appropriate under the
circumstances. However, whether actual results and developments
will conform to expectations is subject to a number of material
risks and uncertainties, including but not limited to: Ring’s
ability to integrate its combined operations successfully after the
Transaction and achieve anticipated benefits from it; risks
relating to any unforeseen liabilities of Ring or the assets
acquired in the Transaction; declines in oil, natural gas liquids
or natural gas prices; the level of success in exploration,
development and production activities; adverse weather conditions
that may negatively impact development or production activities;
the timing of exploration and development expenditures;
inaccuracies of reserve estimates or assumptions underlying them;
revisions to reserve estimates as a result of changes in commodity
prices; impacts to financial statements as a result of impairment
write-downs; risks related to level of indebtedness and periodic
redeterminations of the borrowing base and interest rates under
Ring’s credit facility; Ring’s ability to generate sufficient cash
flows from operations to meet the internally funded portion of its
capital expenditures budget; the impacts of hedging on results of
operations; and Ring’s ability to replace oil and natural gas
reserves. 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, 2022, and its other filings. Ring undertakes no
obligation to revise or update publicly any forward-looking
statements except as required by law.
CONTACT INFORMATION
Al Petrie Advisors
Al Petrie, Senior Partner
Phone: 281-975-2146
Email: apetrie@ringenergy.com
FOOTNOTES
(1) Represents a non-GAAP financial measure that
should not be considered a substitute for any GAAP measure.
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