Ring Energy Announces Record Fourth Quarter and Full Year 2023 Results, Year-End 2023 Proved Reserves and Additional 2024 Guidance – NewMediaReport.org

Ring Energy Announces Record Fourth Quarter and Full Year 2023 Results, Year-End 2023 Proved Reserves and Additional 2024 Guidance

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THE WOODLANDS, Texas, March 07, 2024 (GLOBE NEWSWIRE) — Ring Energy, Inc. (NYSE:REI) (“Ring” or the “Company”) today reported record operational and financial results for the fourth quarter and full year 2023, year-end 2023 proved reserves and provided additional 2024 operational and financial guidance.

2023 Q4 and Full Year Highlights and Recent Key Items

Grew fourth quarter total sales volumes 11% to a record 19,397 barrels of oil equivalent per day (“Boe/d”) from the third quarter;

Increased fourth quarter oil sales volumes 13% to a record 13,637 barrels of oil per day (“Bo/d”) from the third quarter;

Increased year-over-year total sales volumes by 47% to a record 18,119 Boe/d;

Grew full year oil sales volumes by 32% to a record 12,548 Bo/d from 2022;

Reported net income of $50.9 million, or $0.26 per diluted share, in the fourth quarter;

Net income for the full year was $104.9 million, or $0.54 per diluted share;

Generated fourth quarter Adjusted Net Income1 of $21.2 million, or $0.11 per diluted share;

Full year Adjusted Net Income was $100.5 million, or $0.51 per diluted share;

Reduced all-in fourth quarter cash operating costs1 on a Boe basis by 4% from the third quarter, and a 6% decrease for the full year;
Achieved record fourth quarter Adjusted EBITDA1 of $65.4 million — 12% higher than the third quarter;

Grew year-over-year Adjusted EBITDA by 21% to a record $236.0 million;

Delivered record Adjusted Free Cash Flow1 of $16.3 million and Adjusted Cash Flow from Operations1 of $55.1 million in the fourth quarter;

Cash flow positive for the 17th consecutive quarter;
Full year Adjusted Free Cash Flow grew 30% to $45.3 million while generating Adjusted Cash Flow from Operations of $197.0 million — a 14% increase;

Generated a Cash Return on Capital Employed (“CROCE”)1 of 17.2% in 2023;
Paid down $3.0 million of debt during the fourth quarter and $30.0 million since closing the Founders Acquisition in August 2023;

Entered 2024 with liquidity of approximately $175 million;
Exited 2023 with $425 million of borrowings and a Leverage Ratio2 of 1.62x;

Ended 2023 with proved reserves of 129.8 million barrels of oil equivalent (“MMBoe”) and a present value discounted at 10% (“PV-10”)1 of $1.6 billion, using Securities and Exchange Commission (“SEC”) pricing;

Proved developed reserves were 88.1 MMBoe with a PV-10 of $1.3 billion ; and

Successfully completed the Company’s 2023 full year capital spending program, including drilling and placing online 20 horizontal (“Hz”) and 11 vertical wells.

Mr. Paul D. McKinney, Chairman of the Board and Chief Executive Officer, commented, “We ended 2023 with record fourth quarter and full year operational and financial results on multiple fronts. Year-over-year, we achieved a 47% increase in sales volumes, a 21% increase in Adjusted EBITDA, and a 30% increase in Adjusted Free Cash Flow. Driving our results was the successful execution and integration of the two acquisitions made over the past 18 months, the success of our high rate-of-return drilling and recompletion programs, and our continuing focus on reducing costs. The hard work, dedication, and commitment of our workforce to our value focused, proven strategy delivered these outstanding results and we continue to believe staying the course will build near and long-term value for our stockholders. On behalf of our Board of Directors and management team, I would like to thank our employees for their efforts in making 2023 a very good year.”

Mr. McKinney continued, “Our focus for 2024 will be very similar to the past. We will continue a disciplined capital spending program designed to organically maintain or slightly grow our oil production with the flexibility to respond as necessary to changing oil and natural gas prices. We intend to allocate our excess cash from operations to reducing debt and improving our balance sheet. We plan to continue seeking to grow through our pursuit of accretive, balance sheet enhancing acquisitions. These efforts should lead us to our ultimate goal, which is to further position our balance sheet and achieve the size and scale necessary to sustainably return meaningful capital to our stockholders. We believe our efforts in 2024 will make important strides towards achieving these goals. We also want to thank our stockholders for their trust and support as we pursue the opportunities and navigate the challenges the future may present.”

Summary Results

 
Q4 2023
Q3 2023
Q4 to Q3 2023 % Change
Q4 2022
Q4 YOY % Change
FY 2023
FY 2022
FY % Change

Net Sales (Boe/d)
 
19,397
 
17,509
 
11
%
 
17,856
9
%
 
18,119
 
12,364
47
%

Crude Oil (Bo/d)
 
13,637
 
12,028
 
13
%
 
12,189
12
%
 
12,548
 
9,479
32
%

Net Sales (MBoe)
 
1,784.5
 
1,610.9
 
11
%
 
1,642.7
9
%
 
6,613.3
 
4,512.6
47
%

Realized Price – All Products ($/Boe)
$
56.01
$
58.16
 
(4
)%
$
60.69
(8
)%
$
54.60
$
76.95
(29
)%

Revenues ($MM)
$
99.9
$
93.7
 
7
%
$
99.7

%
$
361.1
$
347.2
4
%

Net Income/Loss ($MM)
$
50.9
$
(7.5
)
NM
$
14.5
251
%
$
104.9
$
138.6
(24
)%

Adjusted Net Income ($MM)
$
21.2
$
26.3
 
(19
)%
$
21.8
(3
)%
$
100.5
$
107.5
(7
)%

Adjusted EBITDA ($MM)
$
65.4
$
58.6
 
12
%
$
56.3
16
%
$
236.0
$
195.2
21
%

Capital Expenditures ($MM)
$
38.8
$
42.4
 
(8
)%
$
42.6
(9
)%
$
152.0
$
140.1
9
%

Adjusted Free Cash Flow ($MM)
$
16.3
$
6.1
 
165
%
$
5.5
197
%
$
45.3
$
34.8
30
%

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

Financial Overview: For the fourth quarter of 2023, the Company reported net income of $50.9 million, or $0.26 per diluted share, which included a $32.5 million before tax non-cash unrealized commodity derivative gain, $2.5 million in before tax share-based compensation and $0.4 million in before tax transaction related costs for executed acquisitions and divestitures (“Transaction Costs”). Excluding the estimated after-tax impact of the adjustments, the Company’s Adjusted Net Income was $21.2 million, or $0.11 per diluted share.

In the third quarter of 2023, the Company reported a net loss of $(7.5) million, or $(0.04) per diluted share, which included a $33.9 million before tax non-cash unrealized commodity derivative loss, $2.2 million for before tax share-based compensation, and $(0.2) million in before tax Transaction Costs. Excluding the estimated after-tax impact of these adjustments, the Company’s Adjusted Net Income was $26.3 million, or $0.13 per diluted share.

In the fourth quarter of 2022, Ring reported net income of $14.5 million, or $0.08 per diluted share, which included a $5.4 million before tax non-cash unrealized commodity derivative loss, $2.2 million in before tax share-based compensation, and $1.0 million in before tax Transaction Costs. Excluding the estimated after-tax impact of these adjustments, Adjusted Net Income in the fourth quarter of 2022 was $21.8 million, or $0.12 per diluted share.

Adjusted EBITDA was a record $65.4 million for the fourth quarter of 2023, a 12% increase from $58.6 million for the third quarter of 2023, and a 16% increase from fourth quarter of 2022 Adjusted EBITDA of $56.3 million.

Adjusted Free Cash Flow for the fourth quarter of 2023 was a record $16.3 million compared to $6.1 million in the third quarter of 2023 with the 165% increase primarily due to increased revenues and lower capital spending in the fourth quarter. Fourth quarter 2023 Adjusted Free Cash Flow increased 197% from $5.5 million for the fourth quarter of 2022.

Adjusted Cash Flow from Operations was a record $55.1 million for the fourth quarter of 2023 compared to $48.5 million for the third quarter of 2023 and $47.4 million for the fourth quarter of 2022.

Adjusted Net Income, Adjusted EBITDA, Adjusted Free Cash Flow, Adjusted Cash Flow from Operations, Cash Return on Capital Employed and PV-10 are non-GAAP financial measures, which are described in more detail and reconciled to the most comparable GAAP measures, in the tables shown later in this release under “Non-GAAP Information.”

Sales Volumes, Prices and Revenues: Sales volumes for the fourth quarter of 2023 were 19,397 Boe/d (70% oil, 15% natural gas and 15% natural gas liquids (“NGLs”)), or 1,784,490 Boe, compared to 17,509 Boe/d (69% oil, 16% natural gas and 15% NGLs), or 1,610,857 Boe, for the third quarter of 2023, and 17,856 Boe/d (68% oil, 17% natural gas and 15% NGLs), or 1,642,715 Boe, in the fourth quarter of 2022. Fourth quarter 2023 sales volumes were near the high end of the Company’s guidance of 18,900 to 19,500 Boe/d. Fourth quarter 2023 sales volumes were comprised of 1,254,619 barrels (“Bbls”) of oil, 1,613,102 thousand cubic feet (“Mcf”) of natural gas and 261,020 Bbls of NGLs.  

For the fourth quarter of 2023, the Company realized an average sales price of $77.33 per barrel of crude oil, $(0.12) per Mcf for natural gas and $11.92 per barrel of NGLs. The realized natural gas and NGL prices are impacted by a fee reduction to the value received. For the fourth quarter of 2023, the weighted average natural gas price per Mcf was $1.49 offset by a weighted average fee value per Mcf of ($1.61), and the weighted average NGL price per barrel was $19.99 offset by a weighted average fee of ($8.07) per barrel. The combined average realized sales price for the period was $56.01 per Boe, down 4% versus $58.16 per Boe for the third quarter of 2023, and down 8% from $60.69 per Boe in the fourth quarter of 2022. The average oil price differential the Company experienced from WTI NYMEX futures pricing in the fourth quarter of 2023 was a negative $0.92 per barrel of crude oil, while the average natural gas price differential from NYMEX futures pricing was a negative $3.12 per Mcf.

Revenues were $99.9 million for the fourth quarter of 2023 compared to $93.7 million for the third quarter of 2023 and $99.7 million for the fourth quarter of 2022. The 7% increase in fourth quarter 2023 revenues from the third quarter was driven by higher sales volumes partially offset by lower overall realized pricing.

Lease Operating Expense (“LOE”): LOE, which includes expensed workovers and facilities maintenance, was $18.7 million, or $10.50 per Boe, in the fourth quarter of 2023 versus $18.0 million, or $11.18 per Boe, in the third quarter of 2023 and $17.4 million, or $10.60 per Boe, for the fourth quarter of 2022. Fourth quarter 2023 LOE came in at the low end of the Company’s guidance range of $10.50 to $11.00 per Boe and Ring remains focused on driving continued efficiencies throughout its operations.

Gathering, Transportation and Processing (“GTP”) Costs: As previously disclosed, due to a contractual change effective May 1, 2022, the Company no longer maintains ownership and control of the majority of of its natural gas through processing. As a result, GTP costs are now reflected as a reduction to the natural gas sales price and not as an expense item. There remains only one contract in place with a natural gas processing entity where the point of control of gas dictates requiring the fees to be recorded as an expense.

Ad Valorem Taxes: Ad valorem taxes were $0.92 per Boe for the fourth quarter of 2023 compared to $1.10 per Boe in the third quarter of 2023 and $0.96 per Boe for the fourth quarter of 2022.

Production Taxes: Production taxes were $2.78 per Boe in the fourth quarter of 2023 compared to $2.95 per Boe in the third quarter of 2023 and $3.16 per Boe in fourth quarter of 2022. Production taxes ranged between 5.0% to 5.2% of revenue for all three periods.

Depreciation, Depletion and Amortization (“DD&A”) and Asset Retirement Obligation Accretion: DD&A was $13.76 per Boe in the fourth quarter of 2023 versus $13.65 per Boe for the third quarter of 2023 and $12.71 per Boe in the fourth quarter of 2022. Asset retirement obligation accretion was $0.20 per Boe in the fourth quarter of 2023 compared to $0.22 per Boe for the third quarter of 2023 and fourth quarter of 2022.

General and Administrative Expenses (“G&A”): G&A was $8.2 million ($4.58 per Boe) for the fourth quarter of 2023 versus $7.1 million ($4.40 per Boe) for the third quarter of 2023 and $8.3 million ($5.08 per Boe) in the fourth quarter of 2022. G&A, excluding share-based compensation1, was $5.7 million for the fourth quarter of 2023 ($3.20 per Boe) versus $4.9 million for the third quarter of 2023 ($3.05 per Boe) and $6.1 million in the fourth quarter of 2022 ($3.74 per Boe). The fourth quarter and third quarter of 2023 included Transaction Costs of $0.4 million and $(0.2) million, respectively. Adjusting for Transaction Costs, fourth quarter 2023 G&A, excluding share-based compensation, was $3.00 per Boe compared to $3.15 per Boe for the third quarter of 2023 — a 5% decrease.

Interest Expense: Interest expense was $11.6 million in the fourth quarter of 2023 versus $11.4 million for the third quarter of 2023 and $9.5 million for the fourth quarter of 2022.

Derivative (Loss) Gain: In the fourth quarter of 2023, Ring recorded a net gain of $29.3 million on its commodity derivative contracts, including a realized $3.3 million cash commodity derivative loss and an unrealized $32.5 million non-cash commodity derivative gain. This compared to a net loss of $39.2 million in the third quarter of 2023, including a realized $5.4 million cash commodity derivative loss and an unrealized $33.9 million non-cash commodity derivative loss, and a net loss of $19.3 million in the fourth quarter of 2022, including a realized $13.9 million cash commodity derivative loss and an unrealized $5.4 million non-cash commodity derivative loss.

A summary listing of the Company’s outstanding derivative positions at December 31, 2023 is included in the tables shown later in this release. A quarterly breakout is provided in the Company’s investor presentation.

For full year 2024, the Company currently has approximately 2.1 million barrels of oil (45% of oil sales guidance midpoint) hedged and 2.6 billion cubic feet of natural gas (43% of natural gas sales guidance midpoint) hedged.

Income Tax: The Company recorded a non-cash income tax provision of $7.9 million in the fourth quarter of 2023 versus a non-cash income tax benefit of $3.4 million in the third quarter of 2023 and a non-cash income tax provision of $2.5 million for the fourth quarter of 2022.

Balance Sheet and Liquidity: Total liquidity at the end of the fourth quarter of 2023 was $174.5 million, a 2% increase from September 30, 2023 and a 7% decrease from December 31, 2022. Liquidity at December 31, 2023 consisted of cash and cash equivalents of $0.3 million and $174.2 million of availability under Ring’s revolving credit facility, which includes a reduction of $0.8 million for letters of credit. On December 31, 2023, the Company had $425.0 million in borrowings outstanding on its revolving credit facility that has a current borrowing base of $600.0 million. Ring paid down $3 million of debt during the fourth quarter of 2023 and $30.0 million since the closing of the Founders Transaction. The Company is targeting further debt pay down during 2024 dependent on market conditions, the timing of capital spending and other considerations.

During the fourth quarter of 2023, Ring successfully reaffirmed the Company’s borrowing base of $600 million under its revolving credit facility. The next regularly scheduled bank redetermination is scheduled to occur during May 2024. Ring is currently in compliance with all applicable covenants under its revolving credit facility.

Capital Expenditures: During the fourth quarter of 2023, capital expenditures on an accrual basis were $38.8 million as compared to Ring’s previous guidance of $35 million to $40 million. The Company drilled four Hz wells (three in the CBP and one in NWS) and three vertical wells in the CBP and completed ten wells (six in the CBP and four in the NWS). Also included in fourth quarter 2023 capital spending were costs for capital workovers, infrastructure upgrades, and leasing costs.

For the year ended December 31, 2023, capital expenditures on an accrual basis were $152.0 million, which included costs to drill, complete and place on production 20 Hz wells (14 in the NWS and six in the CBP) and 11 vertical wells in the CBP. Included in full year 2023 capital spending were costs for capital workovers, infrastructure upgrades, recompletions, and leasing costs. Ring also participated in the drilling and completion of five non-operated wells in the NWS and CBP.

The table below sets forth Ring’s drilling and completions activities by quarter for 2023:

Quarter
 
Area
 
Wells Drilled
 
Wells Completed
 
Recompletions

 
 
 
 
 
 
 
 
 

1Q 2023
 
Northwest Shelf (Horizontal)
 
4
 
4
 

 
 
Central Basin Platform (Horizontal)
 

 

 

 
 
Central Basin Platform (Vertical)
 
3
 
3
 
6

 
 
Total
 
7
 
7
 
6

 
 
 
 
 
 
 
 
 

2Q 2023
 
Northwest Shelf (Horizontal)
 
4
 
4
 

 
 
Central Basin Platform (Horizontal)
 

 

 

 
 
Central Basin Platform (Vertical)
 
2
 
2
 
3

 
 
Total
 
6
 
6
 
3

 
 
 
 
 
 
 
 
 

3Q 2023
 
Northwest Shelf (Horizontal)
 
5
 
2
 

 
 
Central Basin Platform (Horizontal)
 
3
 
3
 

 
 
Central Basin Platform (Vertical)
 
3
 
3
 

 
 
Total
 
11
 
8
 

 
 
 
 
 
 
 
 
 

4Q 2023
 
Northwest Shelf (Horizontal)
 
1
 
4
 

 
 
Central Basin Platform (Horizontal)
 
3
 
3
 

 
 
Central Basin Platform (Vertical)
 
3
 
3
 

 
 
Total (1)
 
7
 
10
 

 
 
 
 
 
 
 
 
 

FY 2023
 
Northwest Shelf (Horizontal)
 
14
 
14
 

 
 
Central Basin Platform (Horizontal)
 
6
 
6
 

 
 
Central Basin Platform (Vertical)
 
11
 
11
 
9

 
 
Total (1)
 
31
 
31
 
9

(1) Fourth quarter total and full year total do not include one SWD well completed in the Northwest Shelf.

Full Year 2023 Summary Financial Review

The Company reported net income for full year 2023 of $104.9 million, or $0.54 per diluted share, and Adjusted Net Income of $100.5 million, or $0.51 per diluted share. For full year 2022, Ring reported net income of $138.6 million, or $0.98 per diluted share, and Adjusted Net Income of $107.5 million, or $0.76 per diluted share.

In full year 2023, the Company grew Adjusted EBITDA by 21% to a record $236.0 million from $195.2 million in 2022. Ring generated record Adjusted Free Cash Flow for full year 2023 of $45.3 million versus $34.8 million in 2022 — a 30% increase. For full year 2023, the Company grew Adjusted Cash Flow from Operations by 14% to $197.0 million from $172.9 million in 2022.

Revenues totaled $361.1 million for 2023 compared to $347.2 million in 2022, with the 4% increase driven by higher sales volumes partially offset by lower overall realized commodity prices.

Net sales for full year 2023 were a record 18,119 Boe/d, or 6,613,321 Boe, comprised of 4,579,942 Bbls of oil, 6,339,158 Mcf of natural gas, and 976,852 Bbls of NGLs. Full year 2022 net sales averaged 12,364 Boe/d, or 4,512,610 Boe, which included 3,459,840 Bbls of oil, 4,088,642 Mcf of natural gas, and 371,329 Bbls of NGLs. The increase in sales volumes was a direct result of a full year of production from the Stronghold Acquisition that closed in August 2022 and partial year impact from the Founders Acquisition that closed in August 2023, as well as strong organic growth from the Company’s targeted capital spending program.

For the full year 2023, the Company’s realized crude oil sales price was $76.21 per barrel, the natural gas sales price was $0.05 per Mcf, and the NGLs sales price was $11.95 per barrel. The combined average sales price for full year 2023 was $54.60 per Boe compared to $76.95 per Boe for full year 2022.

For the full year 2023, LOE was $70.2 million, or $10.61 per Boe, versus $47.7 million, or $10.57 per Boe, for full year 2022. The increase in LOE on an absolute basis was primarily associated with a 47% increase in production, as well as increased costs for goods and services due to higher activity levels.

For the full year 2023, G&A was $29.2 million, or $4.41 per Boe, compared to $27.1 million, or $6.00 per Boe for full year 2022. G&A, excluding share-based compensation, was $20.4 million, or $3.08 per Boe, compared to $19.9 million, or $4.42 per Boe for full year 2022. Excluding Transaction Costs, full year 2023 G&A, net of share-based compensation, was $3.01 per Boe — a 24% decrease from full year 2022.

2024 Capital Investment, Sales Volumes, and Operating Expense Guidance

In January, the Company commenced its 2024 development program that includes two rigs (one horizontal and one vertical) and is focused on slightly growing oil volumes while maintaining year-over-year overall production levels. The Company is utilizing a phased (versus continuous) capital drilling program in order to maximize free cash flow.

For full year 2024, Ring expects total capital spending of $135 million to $175 million that includes a balanced and capital efficient combination of drilling, completing and placing on production 18 to 24 Hz and 20 to 30 vertical wells across the Company’s asset portfolio. Additionally, the full year capital spending program includes funds for targeted well recompletions, capital workovers, infrastructure upgrades, reactivations, and leasing costs, as well as non-operated drilling, completion, and capital workovers.

All projects and estimates are based on assumed WTI oil prices of $70 to $90 per barrel and Henry Hub prices of $2.00 to $3.00 per Mcf. As in the past, Ring has designed its spending program with flexibility to respond to changes in commodity prices and other market conditions as appropriate.

Based on the $155 million mid-point of spending guidance, the Company expects the following estimated allocation of capital investment, including:

73% for drilling, completion, and related infrastructure;
24% for recompletions and capital workovers; and
3% for land, environmental and emission reducing upgrades, and non-operated capital.

The Company remains focused on continuing to generate Adjusted Free Cash Flow. All 2024 planned capital expenditures will be fully funded by cash on hand and cash from operations, and excess Adjusted Free Cash Flow is currently targeted for further debt reduction.

The Company currently forecasts full year 2024 oil sales volumes of 12,600 to 13,300 Bo/d compared with full year 2023 oil sales volumes of 12,548 Bo/d, with the mid-point of guidance reflecting a 3% increase.

The guidance in the table below represents the Company’s current good faith estimate of the range of likely future results for the first quarter and full year of 2024. Guidance could be affected by the factors discussed below in the “Safe Harbor Statement” section.

 
 
Q1
 
FY

 
 
2024
 
2024

 
 
 
 
 

Sales Volumes:
 
 
 
 

Total Oil (Bo/d)
 
12,420-12,765
 
12,600-13,300

Mid Point for Oil (Bo/d)
 
12,593
 
12,950

Total (Boe/d)
 
18,000-18,500
 
18,000-19,000

Oil (%)
 
69%
 
70%

NGLs (%)
 
15%
 
15%

Gas (%)
 
16%
 
15%

 
 
 
 
 

Capital Program:
 
 
 
 

Capital spending(1) (millions)
 
$37-$42
 
$135-$175

Mid Point (millions)
 
$39.5
 
$155

Hz wells drilled
 
4-5
 
18-24

Vertical wells drilled
 
4-6
 
20-30

Wells completed and online
 
8-11
 
38-54

 
 
 
 
 

Operating Expenses:
 
 
 
 

LOE (per Boe)
 
$10.75-$11.25
 
$10.50-$11.50

 
 
 
 
 

(1) In addition to Company-directed drilling and completion activities, the capital spending outlook includes funds for targeted well recompletions, capital workovers, infrastructure upgrades and well reactivations. Also included is anticipated spending for leasing costs, and non-operated drilling, completion, and capital workovers.

Year-End 2023 Proved Reserves

The Company’s year-end 2023 SEC proved reserves were 129.8 MMBoe compared to 138.1 MMBoe at year-end 2022. During 2023, Ring recorded reserve additions of 8.2 MMBoe for acquisitions and 4.8 MMBoe for extensions, discoveries and improved recovery. Offsetting these additions were 5.7 MMBoe related to the sale of non-core assets, 6.6 MMBoe of production, 5.3 MMBoe for reductions in year-over-year pricing, and 3.7 MMBoe related to changes in performance and other economic factors.

The SEC twelve-month first day of the month average prices used for year-end 2023 were $74.70 per barrel of crude oil and $2.637 per MMBtu of natural gas, both before adjustment for quality, transportation, fees, energy content, and regional price differentials, while for year-end 2022 they were $90.15 per barrel of crude oil and $6.358 per MMBtu of natural gas.

Year-end 2023 SEC proved reserves were comprised of approximately 63% crude oil, 19% natural gas, and 18% natural gas liquids. At year end, approximately 68% of 2023 proved reserves were classified as proved developed and 32% as proved undeveloped. This is compared to year-end 2022 when approximately 65% of proved reserves were classified as proved developed and 35% were classified as proved undeveloped.

The PV-10 value at year-end 2023 was $1,647.0 million versus $2,773.7 million at the end of 2022.

 
 
Oil (Bbl)
 
Gas (Mcf)
 
Natural Gas Liquids (Bbl)
 
Net
(Boe)
 
PV-10(1)

 
 
 
 
 
 
 
 
 
 
 

Balance, December 31, 2022
 
88,704,743
 
 
157,870,449
 
 
23,105,658
 
 
138,122,143
 
 
$
2,773,656,500

 
 
 
 
 
 
 
 
 
 
 

Purchase of minerals in place
 
6,543,640
 
 
3,372,965
 
 
1,089,382
 
 
8,195,183
 
 
 

Extensions, discoveries and improved recovery
 
3,098,845
 
 
4,113,480
 
 
1,014,343
 
 
4,798,768
 
 
 

Sales of minerals in place
 
(4,897,921
)
 
(2,674,955
)
 
(392,953
)
 
(5,736,700
)
 
 

Production
 
(4,579,942
)
 
(6,339,158
)
 
(976,852
)
 
(6,613,320
)
 
 

Revisions of previous quantity estimates
 
(6,728,088
)
 
(9,946,459
)
 
(621,014
)
 
(9,006,845
)
 
 

 
 
 
 
 
 
 
 
 
 
 

Balance, December 31, 2023
 
82,141,277
 
 
146,396,322
 
 
23,218,564
 
 
129,759,229
 
 
$
1,647,031,127

(1) PV-10 includes provision for plug and abandonment (“P&A”) less salvage, and excludes the full provision for asset retirement obligations or any provision for income taxes. This is a non-GAAP financial measure as defined by the SEC and is derived from the Standardized Measure of Discounted Futures Net Cash Flows, which is the most directly comparable generally accepted accounting principles (“GAAP”) measure.

In accordance with guidelines established by the SEC, estimated proved reserves as of December 31, 2023 were determined to be economically producible under existing economic conditions, which requires the use of the 12-month average commodity price for each product, calculated as the unweighted arithmetic average of the first-day-of-the-month price for the year ended December 31, 2023. The SEC average prices used for year-end 2023 were $74.70 per barrel of crude oil (WTI) and $2.637 per MMBtu of natural gas (Henry Hub), both before adjustment for quality, transportation, fees, energy content, and regional price differentials. Such prices were held constant throughout the estimated lives of the reserves. Future production and development costs are based on year-end costs with no escalations.

Standardized Measure of Discounted Future Net Cash Flows

Ring’s standardized measure of discounted future net cash flows relating to proved oil and natural gas reserves and changes in the standardized measure as described below were prepared in accordance with GAAP.

As of December 31,
 
 
2023
 
 
 
2022
 

 
 
 
 
 

Future cash inflows
 
$
6,622,410,752
 
 
$
9,871,961,000
 

Future production costs
 
 
(2,413,303,488
)
 
 
(2,751,896,250
)

Future development costs (1)
 
 
(562,063,424
)
 
 
(647,196,750
)

Future income taxes
 
 
(548,664,988
)
 
 
(1,142,147,641
)

Future net cash flows
 
 
3,098,378,852
 
 
 
5,330,720,359
 

10% annual discount for estimated timing of cash flows
 
 
(1,699,193,661
)
 
 
(3,058,606,841
)

 
 
 
 
 

Standardized Measure of Discounted Future Net Cash Flows
 
$
1,399,185,191
 
 
$
2,272,113,518
 

(1) Future development costs include not only development costs but also future asset retirement costs.

Reconciliation of PV-10 to Standardized Measure

PV-10 is derived from the Standardized Measure of Discounted Future Net Cash Flows (“Standardized Measure”), which is the most directly comparable GAAP financial measure for proved reserves calculated using SEC pricing. PV-10 is a computation of the Standardized Measure on a pre-tax basis. PV-10 is equal to the Standardized Measure at the applicable date, before deducting future income taxes, discounted at 10 percent. We believe that the presentation of PV-10 is relevant and useful to investors because it presents the discounted future net cash flows attributable to our estimated net proved reserves prior to taking into account future corporate income taxes, and it is a useful measure for evaluating the relative monetary significance of our oil and natural gas properties. Further, investors may utilize the measure as a basis for comparison of the relative size and value of our reserves to other companies without regard to the specific tax characteristics of such entities. Moreover, GAAP does not provide a measure of estimated future net cash flows for reserves other than proved reserves or for reserves calculated using prices other than SEC prices. We use this measure when assessing the potential return on investment related to our oil and natural gas properties. PV-10, however, is not a substitute for the Standardized Measure. Our PV-10 measure and the Standardized Measure do not purport to represent the fair value of our oil and natural gas reserves.

The following table reconciles the PV-10 value of the Company’s estimated proved reserves as of December 31, 2023 to the Standardized Measure:

SEC Pricing Proved Reserves

Standardized Measure Reconciliation
 
 

Present Value of Estimated Future Net Revenues (PV-10)
 
$
1,647,031,127

Future Income Taxes, Discounted at 10%
 
 
247,845,936

Standardized Measure of Discounted Future Net Cash Flows
 
$
1,399,185,191

 
 
 
 

Conference Call Information

Ring will hold a conference call on Friday, March 8, 2024 at 11:00 a.m. ET to discuss its fourth quarter and full year 2023 operational and financial results. An updated investor presentation will be posted to the Company’s website prior to the conference call.

To participate in the conference call, interested parties should dial 833-953-2433 at least five minutes before the call is to begin. Please reference the “Ring Energy Fourth Quarter and Full Year 2023 Earnings Conference Call”. International callers may participate by dialing 412-317-5762. The call will also be webcast and available on Ring’s website at www.ringenergy.com under “Investors” on the “News & Events” page. An audio replay will also be available on the Company’s website following the call.

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. All statements, other than statements of historical fact included in this release, regarding our strategy, future operations, financial position, estimated revenues and losses, projected costs, prospects, plans and objectives of management are forward-looking statements. When used in this release, the words “could,” “may,” “believe,” “anticipate,” “intend,” “estimate,” “expect,” “guidance,” “project,” “goal,” “plan,” “target” and similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain such identifying words. These forward-looking statements are based on management’s current expectations and assumptions about future events and are based on currently available information as to the outcome and timing of future events. 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: 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 the Company’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, 2023, 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. Should one or more of the risks or uncertainties described in this release occur, or should underlying assumptions prove incorrect, our actual results and plans could differ materially from those expressed in any forward-looking statements. All forward-looking statements, expressed or implied, included in this release are expressly qualified in their entirety by this safe harbor statement. This safe harbor statement should also be considered in connection with any subsequent written or oral forward-looking statements that we or persons acting on our behalf may issue. 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

RING ENERGY, INC.

Condensed Statements of Operations

 

 
(Unaudited)
 
 
 
 

 
Three Months Ended
 
Twelve Months Ended

 
December 31,
 
September 30,
 
December 31,
 
December 31,
 
December 31,

 
 
2023
 
 
 
2023
 
 
 
2022
 
 
 
2023
 
 
 
2022
 

 
 
 
 
 
 
 
 
 
 

Oil, Natural Gas, and Natural Gas Liquids Revenues
$
99,942,718
 
 
$
93,681,798
 
 
$
99,697,682
 
 
$
361,056,001
 
 
$
347,249,537
 

 
 
 
 
 
 
 
 
 
 

Costs and Operating Expenses
 
 
 
 
 
 
 
 
 

Lease operating expenses
 
18,732,082
 
 
 
18,015,348
 
 
 
17,411,645
 
 
 
70,158,227
 
 
 
47,695,351
 

Gathering, transportation and processing costs
 
464,558
 
 
 
(4,530
)
 
 
(16,223
)
 
 
457,573
 
 
 
1,830,024
 

Ad valorem taxes
 
1,637,722
 
 
 
1,779,163
 
 
 
1,570,039
 
 
 
6,757,841
 
 
 
4,670,617
 

Oil and natural gas production taxes
 
4,961,768
 
 
 
4,753,289
 
 
 
5,186,644
 
 
 
18,135,336
 
 
 
17,125,982
 

Depreciation, depletion and amortization
 
24,556,654
 
 
 
21,989,034
 
 
 
20,885,774
 
 
 
88,610,291
 
 
 
55,740,767
 

Asset retirement obligation accretion
 
351,786
 
 
 
354,175
 
 
 
365,747
 
 
 
1,425,686
 
 
 
983,432
 

Operating lease expense
 
175,090
 
 
 
138,220
 
 
 
113,138
 
 
 
541,801
 
 
 
363,908
 

General and administrative expense (including share-based compensation)
 
8,164,799
 
 
 
7,083,574
 
 
 
8,346,896
 
 
 
29,188,755
 
 
 
27,095,323
 

 
 
 
 
 
 
 
 
 
 

Total Costs and Operating Expenses
 
59,044,459
 
 
 
54,108,273
 
 
 
53,863,660
 
 
 
215,275,510
 
 
 
155,505,404
 

 
 
 
 
 
 
 
 
 
 

Income (Loss) from Operations
 
40,898,259
 
 
 
39,573,525
 
 
 
45,834,022
 
 
 
145,780,491
 
 
 
191,744,133
 

 
 
 
 
 
 
 
 
 
 

Other Income (Expense)
 
 
 
 
 
 
 
 
 

Interest income
 
96,984
 
 
 
80,426
 
 
 

 
 
 
257,155
 
 
 
4
 

Interest (expense)
 
(11,603,892
)
 
 
(11,381,754
)
 
 
(9,468,684
)
 
 
(43,926,732
)
 
 
(23,167,729
)

Gain (loss) on derivative contracts
 
29,250,352
 
 
 
(39,222,755
)
 
 
(19,330,689
)
 
 
2,767,162
 
 
 
(21,532,659
)

Gain (loss) on disposal of assets
 
44,981
 
 
 

 
 
 

 
 
 
(87,128
)
 
 

 

Other income
 
72,725
 
 
 

 
 
 

 
 
 
198,935
 
 
 

 

Net Other Income (Expense)
 
17,861,150
 
 
 
(50,524,083
)
 
 
(28,799,373
)
 
 
(40,790,608
)
 
 
(44,700,384
)

 
 
 
 
 
 
 
 
 
 

Income (Loss) Before Provision for Income Taxes
 
58,759,409
 
 
 
(10,950,558
)
 
 
17,034,649
 
 
 
104,989,883
 
 
 
147,043,749
 

 
 
 
 
 
 
 
 
 
 

Benefit from (Provision for) Income Taxes
 
(7,862,930
)
 
 
3,411,336
 
 
 
(2,541,980
)
 
 
(125,242
)
 
 
(8,408,724
)

 
 
 
 
 
 
 
 
 
 

Net Income (Loss)
$
50,896,479
 
 
$
(7,539,222
)
 
$
14,492,669
 
 
$
104,864,641
 
 
$
138,635,025
 

 
 
 
 
 
 
 
 
 
 

Basic Earnings (Loss) per share
$
0.26
 
 
$
(0.04
)
 
$
0.09
 
 
$
0.55
 
 
$
1.14
 

Diluted Earnings (Loss) per share
$
0.26
 
 
$
(0.04
)
 
$
0.08
 
 
$
0.54
 
 
$
0.98
 

 
 
 
 
 
 
 
 
 
 

Basic Weighted-Average Shares Outstanding
 
195,687,725
 
 
 
195,361,476
 
 
 
162,743,445
 
 
 
190,589,143
 
 
 
121,264,175
 

Diluted Weighted-Average Shares Outstanding
 
197,848,812
 
 
 
195,361,476
 
 
 
178,736,799
 
 
 
195,364,850
 
 
 
141,754,668
 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

RING ENERGY, INC.

Condensed Operating Data

(Unaudited)

 

 
Three Months Ended
 
Twelve Months Ended

 
December 31,
 
September 30,
 
December 31,
 
December 31,
 
December 31,

 
2023
 
2023
 
2022
 
2023
 
2022

 
 
 
 
 
 
 
 
 
 

Net sales volumes:
 
 
 
 
 
 
 
 
 

Oil (Bbls)
1,254,619
 
 
1,106,531
 
 
1,121,371
 
 
4,579,942
 
 
3,459,840
 

Natural gas (Mcf)(1)
1,613,102
 
 
1,567,104
 
 
1,680,401
 
 
6,339,158
 
 
4,088,642
 

Natural gas liquids (Bbls)(1)
261,020
 
 
243,142
 
 
241,277
 
 
976,852
 
 
371,329
 

Total oil, natural gas and natural gas liquids (Boe)(2)
1,784,490
 
 
1,610,857
 
 
1,642,715
 
 
6,613,321
 
 
4,512,610
 

 
 
 
 
 
 
 
 
 
 

% Oil
70
%
 
69
%
 
68
%
 
69
%
 
77
%

% Natural gas
15
%
 
16
%
 
17
%
 
16
%
 
15
%

% Natural gas liquids
15
%
 
15
%
 
15
%
 
15
%
 
8
%

 
 
 
 
 
 
 
 
 
 

Average daily sales volumes:
 
 
 
 
 
 
 
 
 

Oil (Bbls/d)
13,637
 
 
12,028
 
 
12,189
 
 
12,548
 
 
9,479
 

Natural gas (Mcf/d)(1)
17,534
 
 
17,034
 
 
18,265
 
 
17,368
 
 
11,202
 

Natural gas liquids (Bbls/d)(1)
2,837
 
 
2,643
 
 
2,623
 
 
2,676
 
 
1,017
 

Average daily equivalent sales (Boe/d)
19,397
 
 
17,509
 
 
17,856
 
 
18,119
 
 
12,364
 

 
 
 
 
 
 
 
 
 
 

Average realized sales prices:
 
 
 
 
 
 
 
 
 

Oil ($/Bbl)
77.33
 
 
81.69
 
 
81.62
 
 
76.21
 
 
92.80
 

Natural gas ($/Mcf)(1)
-0.12
 
 
0.36
 
 
2.39
 
 
0.05
 
 
4.57
 

Natural gas liquids ($/Bbls)(1)
11.92
 
 
11.22
 
 
17.21
 
 
11.95
 
 
20.18
 

Barrel of oil equivalent ($/Boe)
56.01
 
 
58.16
 
 
60.69
 
 
54.60
 
 
76.95
 

 
 
 
 
 
 
 
 
 
 

Average costs and expenses per Boe ($/Boe):
 
 
 
 
 
 
 
 
 

Lease operating expenses
10.50
 
 
11.18
 
 
10.60
 
 
10.61
 
 
10.57
 

Gathering, transportation and processing costs
0.26
 
 
0.00


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