Ring Energy Announces Financial and Operating Results for First Quarter 2017

MIDLAND, Texas--()--Ring Energy, Inc. (NYSE MKT: REI) (“Ring”)(“Company”) announced today financial results for the first quarter ended March 31, 2017. For the three month period ended March 31, 2017, Ring had oil and gas revenues of $12,243,793 compared to $6,092,388 for the quarter ended March 31, 2016, and net income of $1,696,141, or $0.03 per diluted share, compared to a net loss of $15,275,044, or $0.50 per diluted share, which included a pre-tax non-cash impairment of $21,412,086 for the same period in 2016. Excluding the after tax impact of the impairment, the net loss per diluted share for the three month period ended March 31, 2016 would have been $0.06.

For the three months ended March 31, 2017, oil sales volume increased to 240,260 barrels, compared to 191,377 barrels for the same period in 2016, an 26% increase, and gas sales volume decreased to 168,349 MCF (thousand cubic feet), compared to 256,748 MCF for the same period in 2016, a 34% decrease. On a barrel of oil equivalent (“BOE”) basis for the three months ended March 31, 2017, production sales increased to 268,318 BOEs, compared to 234,168 BOEs for the same period in 2016, a 15% increase. The average commodity prices received by Ring were $48.69 per barrel of oil and $3.25 per MCF of natural gas for the quarter ended March 31, 2017, compared to $29.20 per barrel of oil and $1.97 per MCF of natural gas for the quarter ended March 31, 2016.

Lease operating expenses, including production taxes, for the three months ended March 31, 2017 were $12.26 per BOE, a 3% increase from the prior year. Depreciation, depletion and amortization costs, including accretion, decreased 10% to $13.46 per BOE. General and administrative costs, which included a $991,210 charge for stock based compensation, were $10.59 per BOE, a 12% increase.

Cash provided by operating activities, before changes in working capital, for the three months ended March 31, 2017 was $7,221,936 or $0.14 per fully diluted share, compared to $1,254,315, or $0.04 per fully diluted share for the same period in 2016. Earnings before interest, taxes, depletion and other non-cash items (“Adjusted EBITDA”) for the three months ended March 31, 2017 was $7,105,257, or $0.14 per fully diluted share, compared to $1,666,936, or $0.05 per fully diluted share for the same period in 2016. (See accompanying table for a reconciliation of net income to adjusted EBITDA).

There was no outstanding debt on the Company’s $500 million senior secured credit facility at March 31, 2017.

Ring’s Chief Executive Officer, Mr. Kelly Hoffman, stated, “2017 is off to a fast start. With the promising initial results from the first 10 horizontal wells we drilled on our Central Basin Platform (“CBP”) property, our enthusiasm has only increased. Our staff has amassed a premier acreage portfolio in what is arguably one of the best locations in the country. With the acquisition of the 33,000 acres in Gaines County completed, we now have over 600 net potential drilling locations. We continue to look for opportunities that complement our core assets. We are excited and expect this year to be an extraordinary time for the Company.”

Non-GAAP Financial Measures:

Net income for the three months ended March 31, 2017 includes a non-cash charge for stock based compensation of $991,210. Excluding this item, the Company’s net income would have been $0.05 per diluted share for the three months ended March 31, 2017. The Company believes results excluding this item 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, 2016, its Form 10-Q for the quarter ended March 31, 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
March 31,
2017 2016
(Unaudited)   (Unaudited)
 
Oil and Gas Revenues $ 12,243,793     $ 6,092,388  
 
Costs and Operating Expenses
Oil and gas production costs 2,705,371 2,490,434
Oil and gas production taxes 583,264 299,271
Depreciation, depletion and amortization 3,474,019 3,394,627
Ceiling test impairment - 21,412,086
Asset retirement obligation accretion 137,176 109,378
General and administrative expense   2,841,111       2,220,072  
 
Total Costs and Operating Expenses   9,740,941       29,925,868  
 
Gain (Loss) from Operations   2,502,852       (23,833,480 )
 
Other Income (Loss)
Interest expense - (415,508 )
Interest income   116,679       2,887  
 
Net Other Income (Loss)   116,679       (412,621 )
 
Income (Loss) before tax provision 2,619,531 (24,246,101 )
 
(Provision for) Benefit From Income Taxes   (1,340,250 )     8,971,057  
 
Net Income (Loss) $ 1,279,281       ($15,275,044 )
 
Basic Income (Loss) Per Common Share $ 0.03 ($0.50 )
Diluted Income (Loss) Per Common Share $ 0.03 ($0.50 )
 
 
Basic Weighted-Average Common Shares Outstanding 49,114,731 30,394,360
Diluted Weighted-Average Common Shares Outstanding 50,414,435 30,394,360
 
 
COMPARATIVE OPERATING STATISTICS
           
Three Months Ended March 31,
2017 2016 Change
 
Net Production - BOE per day 2,981 2,573 16 %
Per BOE:
Average Sales Price $ 45.63 $ 26.02 75 %
 
Lease Operating Expenses 10.08 10.63 -5 %
Production Taxes 2.17 1.28 70 %
DD&A 12.95 14.50 -11 %
Accretion 0.51 0.47 -9 %
General & Administrative Expenses 10.59 9.48 12 %
 
 
RING ENERGY, INC.
CONSOLIDATED BALANCE SHEET
               
March 31, December 31,
2017 2016
 
ASSETS
Current Assets
Cash $ 55,418,128 $ 71,086,381
Accounts receivable 4,756,301 3,453,238
Joint interest billing receivable 271,345 454,461
Prepaid expenses and retainers   132,813     226,835  
Total Current Assets   60,578,587     75,220,915  
Properties and Equipment
Oil and natural gas properties subject to amortization 279,486,903 250,133,965
Inventory for property development 3,711,149 1,582,427
Fixed assets subject to depreciation   1,549,311     1,549,311  
Total Property and Equipment 284,747,363 253,265,703
Accumulated depreciation, depletion and amortization   (44,821,171 )   (41,347,152 )
Net Property and Equipment   239,926,192     211,918,551  
Deferred Income Taxes 20,308,121 20,051,908
Deferred financing Costs 338,354   406,025  
Total Assets $ 321,151,254   $ 307,597,399  
 
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Accounts payable $ 18,561,210   $ 9,099,391  
Total Current Liabilities   18,561,210     9,099,391  
 
Asset retirement obligations   8,329,654     7,957,035  
Total Liabilities   26,890,864     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;
49,116,554 shares and 49,113,063 shares outstanding, respectively

49,116 49,113
Additional paid-in capital 336,041,515 335,197,845
Retained Loss   (41,830,241 )   (44,705,985 )
Total Stockholders' Equity   294,260,390     290,540,973  
Total Liabilities and Stockholders' Equity $ 321,151,254   $ 307,597,399  
 
 
RING ENERGY, INC.
STATEMENTS OF CASH FLOW
           
Three Months Ended
March 31,
2017 2016
 
Cash Flows From Operating Activities
Net income (loss) $ 1,279,281 ($15,275,044 )

Adjustments to reconcile net income to net cash used in operating activities:

Depreciation, depletion and amortization 3,474,019 3,394,627
Ceiling test impairment - 21,412,086
Accretion expense 137,176 109,378
Share-based compensation 991,210 584,325
Deferred income tax provision (benefit) 923,390 (8,971,057 )
Excess tax benefits related to share-based compensation 416,860 -
Changes in assets and liabilities:
Accounts receivable (1,119,947 ) 904,886
Prepaid expenses 161,693 187,298
Accounts payable 4,761,819 (4,086,181 )
Settlement of asset retirement obligation   (8,929 )   (1,344 )
Net Cash Provided by (Used in) Operating Activities   11,016,572     (1,741,026 )
Cash Flows from Investing Activities
Payments to purchase oil and natural gas properties (3,924,404 ) (643,116 )
Payments to develop oil and natural gas properties (19,796,719 ) (3,258,542 )
Purchase of inventory for development   (2,816,165 )   -  
Net Cash Used in Investing Activities   (26,537,288 )   (3,901,658 )
Cash Flows From Financing Activities
Amounts paid for registration statement for future offerings (147,537 ) -
Proceeds from issuance of notes payable - 5,000,000
Proceeds from option exercise   -     22,500  
Net Cash Provided by Financing Activities   (147,537 )   5,022,500  
Net Decrease in Cash (15,668,253 ) (620,184 )
Cash at Beginning of Period   71,086,381     4,431,350  
Cash at End of Period $ 55,418,128     ($3,811,166 )
Supplemental Cash Flow Information
Cash paid for interest   -   $ 352,662  
Noncash Investing and Financing Activities
Asset retirement obligation incurred during development $ 244,372 $ 39,247
Use of inventory in property development $ 687,443 -

Capitalized expenditures attributable to drilling projects financed through current liabilities

$ 4,700,000 -
 
RECONCILIATION OF CASH FLOW FROM OPERATIONS
 
Net cash provided by operating activities $ 11,016,572 ($1,741,026 )
Change in operating assets and liabilities   (3,794,636 )   2,995,341  
 
Cash flow from operations $ 7,221,936   $ 1,254,315  

 

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
             
March 31, March 31,
2017   2016
 
NET INCOME (LOSS) $ 1,279,281 ($15,275,044 )
 
Interest (income) (116,679 ) (2,887 )
Interest expense - 415,508
Income tax expense (benefit) 923,390 (8,971,057 )
Excess tax benefits related to share-based compensation 416,860 -
Depreciation, depletion and amortization 3,474,019 3,394,627
Accretion of discounted liabilities 137,176 109,378
Ceiling test impairment - 21,412,086
Share-based compensation   991,210     584,325  
 
ADJUSTED EBITDA $ 7,105,257   $ 1,666,936  

Contacts

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

Release Summary

Ring Energy Announces Financial and Operating Results For First Quarter 2017

Contacts

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