Ring Energy, Inc. Announces Third Quarter and Nine Month 2014 Financial and Operating Results

Third Quarter 2014 Revenues Increase 287% Over Third Quarter Revenues 2013
Nine Month 2014 Revenues Increase 434% Over Nine Month Revenues 2013

MIDLAND, Texas--()--Ring Energy, Inc. (NYSE MKT: REI) (“Ring”)(“Company”) announced today financial results for the three months and nine months ended September 30, 2014. For the three month period ended September 30, 2014, Ring had oil and gas revenues of $10,929,771, compared to $2,820,731 for the quarter ended September 30, 2013, a 287% increase and net income of $1,726,469 or $0.06 per fully diluted share, compared to a net loss of $131,493, or $0.01 per fully diluted share, for the same period in 2013. For the nine month period ended September 30, 2014, the Company reported oil and gas revenues of $28,104,461, compared to oil and gas revenues of $5,264,267 for the nine month period ended September 30, 2013, a 434% increase. Net income for the nine month period ended September 30, 2014 was $5,711,896, or $0.22 per fully diluted share, compared to a net loss of $1,987,166, or $0.13 per fully diluted share, for the same period in 2013.

The revenue increase was due to increases in production volumes resulting from development of our leases. For the three months ended September 30, 2014, oil sales volume increased to 124,526 barrels, compared to 26,609 barrels for the same period in 2013, and gas sales volume decreased to 8,192 MCF (thousand cubic feet), compared to 9,591 MCF for the same period in 2013. For the nine months ended September 30, 2014, oil sales volume increased to 307,003 barrels, compared to 55,116 barrels for the same period in 2013, and gas sales volume increased to 23,951 MCF, compared to 22,440 MCF for the same period in 2013. The average commodity prices received by Ring were $87.58 per barrel of oil and $2.92 per MCF of natural gas for the quarter ended September 30, 2014, compared to $104.65 per barrel of oil and $3.75 per MCF of natural gas for the quarter ended September 30, 2013. The average prices received for the nine months ended September 30, 2014 were $91.21 per barrel of oil and $4.24 per MCF of natural gas, compared to $94.18 per barrel of oil and $3.27 per MCF of natural gas for the nine month period ended September 30, 2013.

Lease operating expenses, including production taxes, for the three months ended September 30, 2014 were $14.71 per barrel of oil equivalent (“BOE”), a 2% decrease from the prior year. Depreciation, depletion and amortization costs, including accretion, increased 9% to $36.04 per BOE. General and administrative costs, which included a $630,766 charge for stock based compensation, were $14.43 per BOE, a 75% decrease. For the nine months ended September 30, 2014, lease operating expenses, including production taxes, were $14.45 per BOE, a 4% decrease. Depreciation, depletion and amortization costs, including accretion, were $30.89 per BOE, a 7% increase, and general and administrative costs, which included a $1,930,335 charge for stock based compensation, were $16.13 per BOE, an 80% decrease.

There was no outstanding debt on the Company’s $150 million senior secured credit facility at October 1, 2014.

Net cash flow from operations for the three and nine months ended September 30, 2014 was $7,995,660 or $0.30 per fully diluted share, and $20,691,009, or $0.81 per fully diluted share, compared to net cash flow of $1,695,854 and $2,305,449, or $0.09 and $0.14 per fully diluted share for the same periods in 2013 (1).

Ring’s Chief Executive Officer, Mr. Kelly Hoffman, stated, “I am extremely proud of the job our operations team has done. We continued to execute our business plan, despite severe weather disruptions resulting in as many as 20 producing wells being shut in and numerous other wells delayed in various stages of drilling or completion during the third quarter. Our production grew close to 20% over the second quarter despite these problems. We continued to add acreage resulting in additional potential drill sites. We estimate the Company currently has over 2,100 potential drilling locations. We have added a third drilling rig and plan to drill approximately 15 new wells per month through the remainder of 2014 on our Texas properties. We have increased our capital expenditure budget from $115 million to $125 million for 2014 and are continuing to look at acquisition opportunities.”

Non-GAAP Financial Measures:

Earnings for the three months ended September 30, 2014 include a non-cash charge for stock based compensation of $630,766. Earnings for the nine months ended September 30, 2014 include a non-cash charge for stock based compensation of $1,930,335. Excluding such items, the Company’s earnings would have been $0.08 per diluted share for the three months ended September 30, 2014, and $0.27 for the nine months ended September 30, 2014. 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, 2013, its Form 10-Q for the quarter ended September 30, 2014 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,

2014 2013 2014 2013

(Unaudited)

(Unaudited)

(Unaudited)

(Unaudited)

 
Oil and Gas Revenues $10,929,771       $2,820,731   $28,104,461       $5,264,267  
 
Costs and Operating Expenses
Oil and gas production costs 1,347,929 291,182 3,196,907 646,905
Oil and gas production taxes 504,091 130,944 1,297,104 243,620
Depreciation, depletion and amortization 4,494,868 917,116 9,502,880 1,657,386
Accretion expense 42,548 13,906 104,242 37,183
General and administrative expense 1,816,131       1,611,318   5,015,399       4,678,581  
 
Total Costs and Operating Expenses 8,205,567       2,964,466   19,116,532       7,263,675  
 
Other Income (Expense)
Interest income 16,224       12,242   78,573       12,242  
 
Net Other Income (Expense) 16,224       12,242   78,573       12,242  
 
Income (Loss) Before Provision for Income Taxes 2,740,428 (131,493 ) 9,066,502 (1,987,166 )
 
Income tax provision (1,013,959 )     -   (3,354,606 )     -  
 
Net Income (Loss) $1,726,469       ($131,493 ) $5,711,896       ($1,987,166 )
 
Basic Net Income (Loss) Per Common Share $0.07 ($0.01 ) $0.23 ($0.13 )
Diluted Net Income (Loss) Per Common Share $0.06 ($0.01 ) $0.22 ($0.13 )
 
 
Basic Weighted-Average Common Shares Outstanding 25,707,371 17,801,313 24,406,581 15,473,339
Diluted Weighted-Average Common Shares Outstanding 26,881,710 17,801,313 25,568,065 15,473,339
 
 
                 
COMPARATIVE OPERATING STATISTICS
 
Three Months Ended September 30,
2014 2013 Change
 
Net Production - BOE per day 1,368 307 346%
Per BOE:
Average Sales Price $86.82 $100.00 -13%
 
Operating Costs (Includes Production Taxes) $14.71 $14.96 -2%
DD&A (Includes Accretion) $36.04 $33.01 9%

General & Administrative Expenses

$14.43 $57.12 -75%
 
Nine Months Ended September 30,
2014 2013 Change
 
Net Production - BOE per day 1,139 216 427%
Per BOE:
Average Sales price $90.37 $89.44 1%
 
Operating Costs (Includes Production Taxes) $14.45 $15.13 -4%
DD&A (Includes Accretion) $30.89 $28.79 7%

General & Administrative Expenses

$16.13 $79.49 -80%
 
 
           
RING ENERGY, INC.
CONSOLIDATED BALANCE SHEET
 
September 30,

 

December 31,

2014

2013

 
ASSETS
Current Assets
Cash $29,066,848 $52,350,583
Accounts receivable 2,992,849 3,888,402
Joint interest billing receivable 1,373,213 -
Prepaid expenses and retainers 216,853   66,051  
Total Current Assets 33,649,763   56,305,036  
Property and Equipment, Using Full Cost Accounting
Oil and gas properties subject to amortization 133,091,421 58,040,724
Office equipment and automobiles 857,298   257,911  
Total Property and Equipment 133,948,719 58,298,635
Less: Accumulated depreciation and amortization (12,383,133 ) (2,880,253 )
Net Property and Equipment 121,565,586   55,418,382  
Total Assets $155,215,349   $111,723,418  
 
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Accounts payable $8,727,724 $6,229,490
Other accrued liabilities 429,859   1,002,153  
Total Current Liabilities 9,157,583   7,231,643  
Noncurrent Liabilities
Deferred income taxes 4,058,257 703,651
Asset retirement obligations 2,792,810   1,182,410  
Total Noncurrent Liabilities 6,851,067   1,886,061  
 
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; 25,725,001 shares and 23,576,313 shares outstanding, respectively

25,725 23,576
Additional paid-in capital 139,905,105 109,018,165
Accumulated deficit (724,131 ) (6,436,027 )
Total Stockholders' Equity 139,206,699   102,605,714  
Total Liabilities and Stockholders' Equity $155,215,349   $111,723,418  
 
 
           
RING ENERGY, INC.
STATEMENTS OF CASH FLOW
 
Nine Months Ended
September 30,
2014 2013
 
Cash Flows From Operating Activities
Net income $5,711,896 ($1,987,166 )

Adjustments to reconcile net income to net cash provided by operating activities:

Depreciation, depletion and amortization 9,502,880 1,657,386
Accretion expense 104,242 37,183
Share-based compensation 1,930,335 2,598,046
Stock issued 87,050 -
Provision for income taxes 3,354,606 -
Changes in assets and liabilities:
Accounts receivable (477,660 ) (1,304,357 )
Prepaid expenses (150,802 ) (8,169 )
Accounts payable 1,925,940   4,056,603  
Net Cash Provided by Operating Activities 21,988,487   5,049,526  
Cash Flows from Investing Activities
Payments to purchase oil and natural gas properties (12,438,370 ) (4,125,676 )
Payments to develop oil and natural gas properties (60,938,454 ) (17,356,478 )
Purchase of office equipment (599,387 ) (82,805 )
Plugging and abandonment costs incurred (37,287 )  
Net Cash Used in Investing Activities (74,013,498 ) (21,564,959 )
Cash Flows From Financing Activities
Proceeds from option exercise 215,000 -
Proceeds from issuance of common stock 28,526,276   18,978,882  
Net Cash Provided by Financing Activities 28,741,276   18,978,882  
Net Increase (Decrease) in Cash (23,283,735 ) 2,463,449
Cash at Beginning of Period 52,350,583   5,404,167  
Cash at End of Period $29,066,848   $7,867,616  
 
Non-Cash Investing and Financing Activities
Revision of asset retirement obligation estimate - $211,691
Stock issued as consideration in property acquisition $130,428 -
Asset retirement obligation acquired $322,879 -
Asset retirement obligation incurred during development 1,220,566   309,838  
 
RECONCILIATION OF CASH FLOW FROM OPERATIONS
 
Net cash provided by operating activities $21,988,487 $5,049,526
Change in operating assets and liabilities (1,297,478 ) (2,744,077 )
 
Cash flow from operations $20,691,009   $2,305,449  
 

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,

2014

2013

 
NET INCOME $5,711,896 ($1,987,166 )
 
Interest expense (Income) (78,573 ) (12,242 )
Income tax expense 3,354,606 -
Depreciation, depletion and amortization 9,502,880 1,657,386
Accretion expense 104,242 37,183
Share-based compensation 1,930,335   2,598,046  
 
ADJUSTED EBITDA $20,525,386   $2,293,207  

Contacts

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

Release Summary

Ring Energy, Inc. Announces Third Quarter and Nine Month Financial and Operating Results

Contacts

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