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REI - Ring Energy Inc News Story

$2.29 0.0  0.9%

Last Trade - 02/12/21

Sector
Energy
Size
Small Cap
Market Cap £170.4m
Enterprise Value £392.2m
Revenue £126.5m
Position in Universe 4703rd / 7294

Ring Energy Announces Second Quarter 2021 Results and Increased Drilling Plans for Second Half 2021

Mon 9th August, 2021 11:49pm
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THE WOODLANDS, Texas, Aug. 09, 2021 (GLOBE NEWSWIRE) -- Ring Energy, Inc.
(NYSE American: REI) (“Ring” or the “Company”) today reported
operational and financial results for the second quarter 2021. In addition,
the Company announced drilling plans for the second half of 2021 that include
three or more wells in each of Ring’s Northwest Shelf (“NWS”) and the
Central Basin Platform (“CBP”) areas.

Highlights and Recent Key Items
* Sold 8,709 barrels of oil equivalent per day (“Boe/d”), or 792,551
barrels of oil equivalent (“Boe”) (89% oil), in the second quarter of
2021, up 11% from the first quarter of 2021;
* Reported a net loss of $15.9 million, or $0.16 per share, and Adjusted Net
Income(1) of $7.3 million, or $0.07 per share, in the second quarter of 2021;
* Generated Adjusted EBITDA(1) of $20.6 million for the second quarter of
2021; * Adjusted EBITDA for the first half of 2021 totaled $39.6 million;
 
* Produced Net Cash Provided by Operating Activities of $16.3 million and Free
Cash Flow(1) of $5.6 million in the second quarter of 2021; * Net Cash
Provided by Operating Activities and Free Cash Flow for the first six months
of 2021 totaled $32.0 million and $8.6 million, respectively;
 
* Further reduced debt on the Company’s revolving credit facility by $5.0
million during the second quarter 2021; * Reduced long-term debt by $12.5
million in the first half of 2021;   
 
* Successfully reaffirmed Ring’s borrowing base at $350 million, while
easing the minimum required oil hedges for calendar 2022;
* Reduced future operating costs and costly workovers through the conversion
of five wells from downhole electrical submersible pumps to rod pumps
(“CTRs”) in the second quarter, including four in the NWS and one in the
CBP; * Performed 14 CTRs in the first six months of 2021, including 11 in the
NWS and three in the CBP;
 
* Drilled, completed and placed on production all three Phase II wells (all in
NWS and 74% working interest) by early June, on schedule and within budget.
Production results to date are meeting or exceeding expectations;
* Exchanged calendar 2021 calls for calendar 2022 swaps, thereby increasing
the opportunity for near-term cash flow which will be used to accelerate debt
repayment; and
* In response to a higher crude oil price environment, the Company initiated a
four-well Phase III drilling program in early August that will be followed by
a Phase IV drilling program of two or more additional wells to begin early in
the fourth quarter.
________________________
(1) A non-GAAP financial measure; see “Non-GAAP Information” section in
this release for more information including reconciliations to the most
comparable GAAP measures.



Mr. Paul D. McKinney, Chairman of the Board and Chief Executive Officer,
commented, “We were pleased with our overall results for the second quarter,
including another period of generating free cash flow and further paying down
long-term debt. Supporting our second quarter and 2021 year-to-date
performance was a continued emphasis on driving operational efficiencies and
the ongoing benefits afforded from our successful development program. Our
targeted efforts have generated $39.6 million in Adjusted EBITDA in the first
half of 2021, which allowed us to invest $26.0 million in capital expenditures
and pay down $12.5 million in debt. Partially offsetting our solid results for
the second quarter were certain unanticipated third-party facility processing
and pipeline capacity constraints that affected our natural gas sales volumes.
We also had lightning strike-related damage to several of our facilities in
late May and early June that impacted oil sales volumes for the period, with
repairs completed and related production brought back online by mid-July.”

“During the second quarter, all three wells included in our Phase II
drilling program were placed online, within budget, and we have been pleased
with their production results to date. When considering these results and that
the economic returns of our Phase I and Phase II wells are being improved by
current commodity prices, the Company approved an increase to its original
drilling plans for the rest of the year. We picked up two rigs last week and
initiated the drilling of the first two wells of a four-well Phase III
drilling program. We intend to follow up these four wells with an additional
two or more wells early in the fourth quarter, all of which target high
rate-of-return drilling prospects in our NWS and CBP acreage. We anticipate
the payback on invested capital in these wells to be approximately one year or
less, which places us in a strong position as we enter 2022.”     

“Supported by our strategic development efforts as an operator with proven
expertise at lowering costs and increasing production efficiencies, we believe
Ring is positioned for continued success. We also remain encouraged by the M&A
prospects we are seeing in the marketplace and continue to actively evaluate
potential accretive transactions that can add value for our shareholders. Over
the longer term, we believe the ongoing successful execution of our internal
and external efforts will continue to further differentiate Ring in the
marketplace.”

For the second quarter of 2021, the Company reported a net loss of $15.9
million, or $0.16 per share, which included before tax adjustments of $22.8
million for a non-cash unrealized commodity derivative loss and $0.4 million
for share-based compensation. Excluding the estimated after-tax impact of the
adjustments, the Company’s Adjusted Net Income was $7.3 million, or $0.07
per share. In the first quarter of 2021, the Company reported a net loss of
$19.1 million, or $0.19 per share, which included before tax adjustments of
$25.7 million for a non-cash unrealized commodity derivative loss and $0.4
million for share-based compensation. Excluding the estimated after-tax impact
of these adjustments, the Company’s Adjusted Net Income was $7.0 million, or
$0.07 per share. In the second quarter of 2020, Ring reported a net loss of
$135.0 million, or $1.99 per share, which included before tax adjustments of
$147.9 million for a non-cash ceiling test impairment primarily due to lower
oil pricing, $26.8 million for a non-cash unrealized commodity derivative loss
and $1.3 million for share-based compensation. Excluding the estimated
after-tax impact of these adjustments, Adjusted Net Income in the second
quarter of 2020 was $1.5 million, or $0.02 per share.

Adjusted EBITDA increased to $20.6 million for the second quarter of 2021 from
$19.0 million in the first quarter of 2021 and $13.7 million in the second
quarter of 2020. The increase in Adjusted EBITDA compared to both prior
periods was primarily due to higher oil prices and sales volumes.

Free Cash Flow for the second quarter of 2021 increased to $5.6 million from
$2.9 million in the first quarter of 2021 due to higher oil prices and sales
volumes and lower capital expenditures. Second quarter 2021 Free Cash Flow
decreased $2.2 million compared to $7.8 million for the second quarter of 2020
primarily driven by higher capital expenditures in 2021.  

Adjusted Net Income, Adjusted EBITDA and Free Cash Flow 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 second quarter of
2021 were 8,709 Boe/d (89% oil), or 792,551 Boe, an increase of 11% compared
to 7,960 Boe/d (85% oil), or 716,422 Boe, for the first quarter of 2021, and
an increase of 59% compared to 5,487 Boe/d (86% oil), or 499,333 Boe, in the
second quarter of 2020. Second quarter 2021 sales volumes were comprised of
702,408 barrels (“Bbls”) of oil and 540,857 thousand cubic feet
(“Mcf”) of natural gas.

Sales volumes for the second quarter of 2021 were positively impacted by the
Company’s successful NWS Phase I and Phase II development programs.
Partially offsetting the overall increase, a significant portion of the
Company’s CBP gas sales volumes were reduced by the unexpected and ongoing
disruption associated with the previously announced third-party gas processing
facilities damaged during the February winter storm. Also impacting the second
quarter was lower-than-anticipated NWS natural gas sales due to third-party
upgrades to its processing facility and pipeline constraints that began in May
and have continued into the third quarter. Lastly, the Company incurred
additional deferred production in May and June due to lightning strikes that
damaged Company equipment at two tank batteries. Repairs were completed and
the associated production was brought back online in the middle of July.

Ring expects second half 2021 sales of 8,700 to 9,200 Boe/d (7,700 to 8,100
Bopd). Assuming the successful completion and timing of the Company’s Phase
III and Phase IV drilling programs, Ring expects to exit 2021 with sales
volumes in excess of the high-end of second half guidance.

For the second quarter of 2021, the Company realized an average sales price of
$65.00 per barrel for crude oil and $3.90 per Mcf for natural gas. The
combined average realized sales price for the period was $60.26 per Boe, up 9%
versus $55.14 per Boe for the first quarter of 2021, and up 183% from $21.30
per Boe in the second quarter of 2020. The average price differential the
Company experienced from WTI posting(2) price in the second quarter of 2021
was approximately ($0.99) per barrel of crude oil.

Revenues were $47.8 million for the second quarter of 2021 compared to $39.5
million for the first quarter of 2021 and $10.6 million for the second quarter
of 2020. The 21% increase in second quarter 2021 revenues from this year’s
first quarter and the 350% improvement from the second quarter of 2020 were
both driven by higher oil sales volumes and improved oil prices.

________________________
(2) WTI posting price per Bbl of oil is based on NYMEX.



Lease Operating Expense (“LOE”): LOE, which includes expense workovers and
facilities maintenance, was $7.4 million, or $9.37 per Boe, in the second
quarter of 2021 versus $8.2 million, or $11.48 per Boe, in the first quarter
of 2021 and $5.6 million, or $11.31 per Boe, for the second quarter of 2020.

Gathering, Transportation and Processing (“GTP”) Costs: GTP costs were
$1.13 per Boe in the second quarter of 2021 versus $1.31 per Boe in the first
quarter of 2021 and $1.25 per Boe in the second quarter of 2020.

Ad Valorem Taxes: Ad valorem taxes were $0.89 per Boe for the second quarter
of 2021 compared to $1.03 per Boe in the first quarter of 2021 and $1.60 per
Boe for the second quarter of 2020.

Production Taxes: Production taxes were $2.77 per Boe in the second quarter of
2021 compared to $2.59 per Boe in the first quarter of 2021 and $0.87 per Boe
in second quarter of 2020. Production taxes remained steady at 4-5% of revenue
for all three periods.

Depreciation, Depletion and Amortization (“DD&A”) and Asset Retirement
Obligation Accretion: DD&A was $11.70 per Boe in the second quarter of 2021
versus $11.32 per Boe for the first quarter of 2021 and $14.70 in the second
quarter of 2020. The lower second quarter 2021 depletion rate compared with
the same period in 2020 was primarily the result of the ceiling test
write-down during 2020. Asset retirement obligation accretion was $0.23 per
Boe in the second quarter of 2021 compared to $0.27 per Boe for the first
quarter of 2021 and $0.46 per Boe in the second quarter of 2020.

Operating Lease Expense:   Operating lease expense was $84,790 for the
second quarter of 2021 versus $271,517 for the first quarter of 2021 and
$292,207 in the second quarter of 2020. These expenses are primarily
associated with the Company’s office leases.

General and Administrative Expenses (“G&A”): G&A, excluding share-based
compensation, was $3.4 million, or $4.30 per Boe, for the second quarter 2021
versus $2.6 million, or $3.57 per Boe, for the first quarter of 2021 and $2.9
million, or $5.73 per Boe, in the second quarter of 2020.

Derivative (Loss) Gain: In the second quarter of 2021, Ring recorded a loss of
$35.3 million on its commodity derivative contracts, including a realized
$12.5 million cash commodity derivative loss and an unrealized $22.8 million
non-cash commodity derivative loss, largely due to higher quarter-end oil
prices compared to first quarter of 2021. This compared to a net loss of $31.6
million in the first quarter of 2021, of which $25.7 million was unrealized,
and a net loss of $13.0 million in the second quarter of 2020, of which $26.8
million was unrealized.

In the second quarter of 2021, Ring added the following derivative positions:

                                                    Average        Weighted Avg.     
 Date Entered Into  Production Period   Instrument  Daily Volumes  Swap Price        
 Crude Oil - WTI                                    (Bbls)         (per Bbl)         
                                                                                     
 05/11/2021         Calendar year 2022  Swaps       879 ((1))      $49.03            
                                                                                     
 (1) The notional quantity per the swap contract entered into on May 11, 2021 is for 26,750 barrels of oil per month. The 879 represents the daily amount on an annual basis. 
                                                                                     

In addition to adding the above derivative position, the Company bought back a
1,500 Bbl/d call option for June 1 through December 31, 2021, in the second
quarter of 2021. A full listing of the Company’s current outstanding
derivative positions is included in the tables shown later in this release.

Interest Expense: Interest expense was $3.7 million in both the second and
first quarters of 2021 and $4.3 million for the second quarter of 2020.
Interest expense declined year-over-year due to a $72.3 million lower average
daily balance of long-term debt and a lower margin rate for the three months
ended June 30, 2021. The lower margin rate was associated with a reduced
percentage utilization of the borrowing base.

Income Tax: The Company recorded a non-cash income tax provision of $190,644
in the second quarter of 2021 and $39.1 million for the second quarter of
2020. There was no non-cash income tax benefit or provision recorded in the
first quarter of 2021. The large tax benefit in the second quarter of 2020 was
primarily related to the ceiling test write-down during that period.

Balance Sheet and Liquidity: Total liquidity at the end of the second quarter
of 2021 was $51.4 million, an increase of 13% from March 31, 2021. Liquidity
consisted of cash and cash equivalents of $2.7 million and $48.7 million of
availability under Ring’s revolving bank credit facility, which includes a
reduction of $0.8 million for letters of credit. On June 30, 2021, the Company
had $300.5 million in borrowings on its revolving credit facility. Ring paid
down $5.0 million of debt during the second quarter of 2021, and is targeting
further debt reduction during the balance of 2021.

On June 10, 2021, Ring announced the successful results of the spring
redetermination of its revolving credit facility, including:
* Reaffirmation of the borrowing base at $350 million;
* Easing of the minimum required oil hedges for calendar 2022 from 4,000
Bbls/d to 3,100 Bbls/d, which is fully covered by oil hedges currently in
place; and
* Enhanced price optionality and opportunity for higher forecasted 2021 cash
flow generation.
The next regularly scheduled bank redetermination will be on or around
November 1, 2021, and Ring is currently in compliance with all applicable
covenants of its revolving credit facility agreement.

Capital Expenditures and Asset Transfers: During the second quarter of 2021,
capital expenditures were $11.5 million as the Company drilled, completed and
placed on production the three wells of its NWS Phase II program and also
performed five CTR projects. In the first quarter of 2021, capital
expenditures were $14.5 million, which included costs to finish drilling,
completing and placing on production the four wells of its NWS Phase I program
and perform nine CTR projects. During the first quarter of 2021, Ring also
received net value consideration in cash of $2.0 million for the sale and
exchange of certain oil and gas interests in Andrews County, Texas.

Second Half 2021 Phase III and Phase IV Drilling Programs

In response to a higher crude oil price environment, Ring recently contracted
two rigs and commenced a Phase III drilling program of four wells, including
two in the NWS and two in the CBP (all 100% working interest). Ring will
retain one rig to commence a Phase IV drilling program of two or more wells in
the NWS and CBP areas, beginning early in the fourth quarter. The wells in the
NWS are expected to be one-mile laterals while the ones in the CBP are
expected to be 1.5-mile laterals.  

Second Half 2021 Capital Investment Program

Incorporating the Company’s expanded drilling plans designed to capitalize
on a higher crude oil price environment, Ring anticipates capital spending for
the second half of 2021 of $30 million to $35 million, which includes the
estimated cost to drill and complete six to eight horizontal wells. The
capital spending outlook includes targeted well reactivations, workovers,
infrastructure upgrades, lease costs and continuing the successful CTR program
in its NWS and CBP areas. Capital expenditures are expected to be fully funded
by cash on hand and cash from operations, with excess free cash flow allocated
to debt reduction.     

As previously announced, Ring launched a sales process during the second
quarter of 2021 to divest of its Delaware Basin assets. The Company
anticipates using the net proceeds from the potential sale to further reduce
its debt position.

Second Half 2021 Sales Volumes, Operating Expense and Capital Spending
Guidance

The guidance for the second half of 2021 in the table below represents the
Company's current best estimate of the range of likely future results.
Guidance could be affected by the factors described below in "Safe Harbor
Statement".

                                                                Second Half        
                                                                2021               
                                                                                   
 Sales Volumes:                                                                    
             Total (Boe/d)                                      8,700 - 9,200      
             Oil (Bo/d)                                         7,700 - 8,100      
                                                                                   
 Operating Expenses:                                                               
             Lifting cost ((1))(per Boe)                        $10.50 - $11.00    
                                                                                   
 Capital Program:                                                                  
             Number of new wells drilled                        6 - 8              
             Number of new wells completed                      6 - 8              
                                                                                   
             Capital spending ((2))(millions)                   $30 - $35          
                                                                                   
 (1) Lifting cost equals lease operating expenses and gathering, transportation and processing costs divided by the total barrels of oil equivalent (6 Mcf = 1 Boe) sold during the same period. 
                                                                                   
 (2) In addition to Company-directed drilling and completion activities, the capital spending outlook includes funds for targeted well reactivations, workovers, infrastructure upgrades, and continuing the Company's successful CTR program in its Northwest Shelf and Central Basin Platform areas. Also included is anticipated spending for lease costs, contractural drilling obligations and non-operated drilling, completion and capital workovers. 
                                                                                   

Conference Call Information

Ring will hold a conference call on Tuesday, August 10, 2021 at 10:00 a.m. ET
(9:00 a.m. CT) to discuss its second quarter 2021 operational and financial
results. To participate, interested parties should dial 833-953-2433 at least
five minutes before the call is to begin. Please reference the “Ring Energy
Second Quarter 2021 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 “Events” page. An audio replay will also be available on the
Company’s website following the call.

An updated investor presentation prepared in conjunction with second quarter
results will be posted to the Company’s website prior to the conference
call.

About Ring Energy, Inc.

Ring Energy, Inc. is an oil and gas exploration, development, and production
company with current operations focused on the conventional development of its
Permian Basin assets in West Texas and New Mexico. 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 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,
2020, 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.

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                                                                Six Months Ended                                    
                                                                            June 30,                   March 31,                    June 30,                  June 30,                    June 30,                
                                                                            2021                       2021                         2020                      2021                        2020                    
                                                                                                                                                                                                                  
 Oil and Natural Gas Revenues                                               $    47,760,102            $     39,502,532             $    10,636,593           $    87,262,634             $    50,206,921         
                                                                                                                                                                                                                  
 Costs and Operating Expenses                                                                                                                                                                                     
 Lease operating expenses                                                        7,424,488                   8,226,575                   5,646,330                 15,651,063                  14,067,717         
 Gathering, transportation and processing costs                                  897,166                     935,019                     625,966                   1,832,185                   1,775,585          
 Ad valorem taxes                                                                703,775                     737,251                     800,000                   1,441,026                   1,607,455          
 Oil and natural gas production taxes                                            2,198,339                   1,852,762                   433,760                   4,051,101                   2,304,005          
 Depreciation, depletion and amortization                                        9,275,126                   8,108,158                   7,338,108                 17,383,284                  21,021,104         
 Ceiling test impairment                                                         -                           -                           147,937,943               -                           147,937,943        
 Asset retirement obligation accretion                                           184,013                     193,744                     231,367                   377,757                     463,329            
 Operating lease expense                                                         84,790                      271,517                     292,207                   356,307                     581,258            
 General and administrative expense (including share-based compensation)         3,757,152                   2,912,991                   4,176,609                 6,670,143                   7,212,504          
                                                                                                                                                                                                                  
 Total Costs and Operating Expenses                                              24,524,849                  23,238,017                  167,482,290               47,762,866                  196,970,900        
                                                                                                                                                                                                                  
 Income (Loss) Income from Operations                                            23,235,253                  16,264,515                  (156,845,697  )           39,499,768                  (146,763,979  )    
                                                                                                                                                                                                                  
 Other Income (Expense)                                                                                                                                                                                           
 Interest income                                                                 1                           -                           1                         1                           6                  
 Interest (expense)                                                              (3,654,529   )              (3,741,969   )              (4,253,040    )           (7,396,498   )              (8,501,538    )    
 (Loss) gain on derivative contracts                                             (35,277,240  )              (31,588,639  )              (13,017,962   )           (66,865,879  )              37,402,847         
 Deposit forfeiture income                                                       -                           -                           -                         -                           -                  
                                                                                                                                                                                                                  
 Net Other Income (Expense)                                                      (38,931,768  )              (35,330,608  )              (17,271,001   )           (74,262,376  )              28,901,315         
                                                                                                                                                                                                                  
 (Loss) Income Before Tax Provision                                              (15,696,515  )              (19,066,093  )              (174,116,698  )           (34,762,608  )              (117,862,664  )    
                                                                                                                                                                                                                  
 Benefit from (Provision for) Income Taxes                                       (190,644     )              -                           39,116,632                (190,644     )              26,666,716         
                                                                                                                                                                                                                  
 Net (Loss) Income                                                          $    (15,887,159  )        $     (19,066,093  )         $    (135,000,066  )      $    (34,953,252  )         $    (91,195,948   )    
                                                                                                                                                                                                                  
 Basic (Loss) Earnings per Share                                            $    (0.16        )        $     (0.19        )         $    (1.99         )      $    (0.35        )         $    (1.34         )    
 Diluted (Loss) Earnings per Share                                          $    (0.16        )        $     (0.19        )         $    (1.99         )      $    (0.35        )         $    (1.34         )    
                                                                                                                                                                                                                  
 Basic Weighted-Average Shares Outstanding                                       99,300,458                  99,092,715                  67,980,794                99,197,160                  67,987,295         
 Diluted Weighted-Average Shares Outstanding                                     99,300,458                  99,092,715                  67,980,794                99,197,160                  67,987,295         
                                                                                                                                                                                                                  



 RING ENERGY, INC.                                                                                                                                                                                 
 Condensed Operating Data                                                                                                                                                                          
 (Unaudited)                                                                                                                                                                                       
                                                                                                                                                                                                   
                                                                            Three Months Ended                                                    Six Months Ended                                 
                                                                            June 30,               March 31,                 June 30,             June 30,                    June 30,             
                                                                                 2021                    2021                     2020                 2021                        2020            
                                                                                                                                                                                                   
 Net sales volumes:                                                                                                                                                                                
 Oil (Bbls)                                                                      702,408                 610,121  ((2))           429,751              1,312,529  ((2))            1,285,354       
 Natural gas (Mcf)                                                               540,857                 637,808                  417,491              1,178,666                   1,183,042       
 Total oil and natural gas (Boe) ((1))                                           792,551                 716,422                  499,333              1,508,973                   1,482,528       
 % Oil                                                                           89 %                    85 %                     86 %                 87 %                        87 %            
                                                                                                                                                                                                   
 Average daily equivalent sales (Boe/d)                                          8,709                   7,960                    5,487                8,337                       8,146           
                                                                                                                                                                                                   
 Average realized sales prices:                                                                                                                                                                    
 Oil ($/Bbl)                                                                $    65.00             $     58.00               $    24.23           $    61.74                  $    38.16           
 Natural gas ($/Mcf)                                                             3.90                    6.46                     0.53                 5.28                        0.98            
 Barrel of oil equivalent ($/Boe)                                           $    60.26             $     55.14               $    21.30           $    57.83                  $    33.87           
                                                                                                                                                                                                   
 Average costs and expenses per Boe ($/Boe):                                                                                                                                                       
 Lease operating expenses                                                   $    9.37              $     11.48               $    11.31           $    10.37                  $    9.49            
 Gathering, transportation and processing costs                                  1.13                    1.31                     1.25                 1.21                        1.20            
 Ad valorem taxes                                                                0.89                    1.03                     1.60                 0.95                        1.08            
 Oil and natural gas production taxes                                            2.77                    2.59                     0.87                 2.68                        1.55            
 Depreciation, depletion and amortization                                        11.70                   11.32                    14.70                11.52                       14.18           
 Asset retirement obligation accretion                                           0.23                    0.27                     0.46                 0.25                        0.31            
 Operating lease expense                                                         0.11                    0.38                     0.59                 0.24                        0.39            
 General and administrative expense (including share-based compensation)         4.74                    4.07                     8.36                 4.42                        4.87            
 General and administrative expense (excluding share-based compensation)         4.30                    3.57                     5.73                 3.95                        3.52            
                                                                                                                                                                                                   
 (1) Boe is determined using the ratio of six Mcf of natural gas to one Bbl of oil (totals may not compute due to rounding). The conversion ratio does not assume price equivalency and the price on an equivalent basis for oil and natural gas may differ significantly. 
                                                                                                                                                                                                   
 (2) Includes 379 barrels of skim oil.                                                                                                                                                             



 RING ENERGY, INC.                                                                                                                                                                                       
 Condenced Balance Sheets                                                                                                                                                                                
                                                                                                                                                                                                         
                                                                                                                                                 (Unaudited)                                             
                                                                                                                                                 June 30,                    December 31,                
                                                                                                                                                 2021                        2020                        
                                                                                                                                                                                                         
 ASSETS                                                                                                                                                                                                  
 Current Assets                                                                                                                                                                                          
 Cash and cash equivalents                                                                                                                       $     2,670,242             $      3,578,634            
 Accounts receivable                                                                                                                                   21,679,567                   14,997,979           
 Joint interest billing receivable                                                                                                                     1,909,804                    1,327,262            
 Derivative receivable                                                                                                                                 -                            499,906              
 Prepaid expenses and other assets                                                                                                                     1,577,671                    396,109              
 Total Current Assets                                                                                                                                  27,837,284                   20,799,890           
                                                                                                                                                                                                         
 Properties and Equipment                                                                                                                                                                                
 Oil and natural gas properties subject to amortization                                                                                                858,427,028                  836,514,815          
 Financing lease asset subject to depreciation                                                                                                         819,784                      858,513              
 Fixed assets subject to depreciation                                                                                                                  1,741,902                    1,520,890            
 Total Properties and Equipment                                                                                                                        860,988,714                  838,894,218          
 Accumulated depreciation, depletion and amortization                                                                                                  (216,589,422  )              (200,111,658  )      
 Net Properties and Equipment                                                                                                                          644,399,292                  638,782,560          
                                                                                                                                                                                                         
 Operating Lease Asset                                                                                                                                 1,411,150                    1,494,399            
 Properties and Equipment                                                                                                                              2,049,096                    2,379,348            
                                                                                                                                                                                                         
 TOTAL ASSETS                                                                                                                                    $     675,696,822           $      663,456,197          
                                                                                                                                                                                                         
 LIABILITIES AND STOCKHOLDERS' EQUITY                                                                                                                                                                    
 Current Liabilities                                                                                                                                                                                     
 Accounts payable                                                                                                                                $     44,128,214            $      32,500,081           
 Financing lease liability                                                                                                                             259,261                      295,311              
 Operating lease liability                                                                                                                             216,730                      859,017              
 Derivative liabilities                                                                                                                                42,517,473                   3,287,328            
 Notes payable                                                                                                                                         758,150                      -                    
 Total Current Liabilities                                                                                                                             87,879,828                   36,941,737           
                                                                                                                                                                                                         
 Deferred income taxes                                                                                                                                 190,644                      -                    
 Revolving line of credit                                                                                                                              300,500,000                  313,000,000          
 Financing lease liability, less current portion                                                                                                       4,183                        126,857              
 Operating lease liability, less current portion                                                                                                       1,285,335                    635,382              
 Derivative liabilities                                                                                                                                10,147,883                   869,273              
 Asset retirement obligations                                                                                                                          14,992,850                   17,117,135           
                                                                                                                                                                                                         
 Total Liabilities                                                                                                                                     415,000,723                  368,690,384          
                                                                                                                                                                                                         
 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; 99,351,145 shares and 85,568,287 shares issued and outstanding, respectively          99,351                       85,568               
 Additional paid-in capital                                                                                                                            551,821,170                  550,951,415          
 Accumulated deficit                                                                                                                                   (291,224,422  )              (256,271,170  )      
                                                                                                                                                                                                         
 Total Stockholders' Equity                                                                                                                            260,696,099                  294,765,813          
                                                                                                                                                                                                         
 TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                                                                                                      $     675,696,822           $      663,456,197          
                                                                                                                                                                                                         



 RING ENERGY, INC.                                                                                                                                                                                                                                                                      
 Condensed Statements of Cash Flows                                                                                                                                                                                                                                                     
 (Unaudited)                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                        
                                                                                                                                    Three Months Ended                                                                               Six Months Ended                                   
                                                                                                                                    June 30,                                  March 31,                    June 30,                  June 30,                    June 30,               
                                                                                                                                    2021                                      2021                         2020                      2021                        2020                   
                                                                                                                                                                                                                                                                                        
 Cash Flows From Operating Activities                                                                                                                                                                                                                                                   
                      Net (loss) income                                                                                             $                   (15,887,159  )        $     (19,066,093  )         $    (135,000,066  )      $    (34,953,252  )         $    (91,195,948  )    
                      Adjustments to reconcile net (loss) income to net cash provided by operating activities:                                                                                                                                                                          
                      Depreciation, depletion and amortization                                                                                          9,275,126                   8,108,158                   7,338,108                 17,383,284                  21,021,104        
                      Ceiling test impairment                                                                                                           -                           -                           147,937,943               -                           147,937,943       
                      Accretion expense                                                                                                                 184,013                     193,744                     231,367                   377,757                     463,329           
                      Amortization of deferred financing costs                                                                                          147,224                     183,027                     189,083                   330,251                     378,165           
                      Share-based compensation                                                                                                          351,775                     355,494                     1,317,542                 707,269                     1,991,337         
                      Shares issued for services                                                                                                        -                           -                           -                         -                           -                 
                      Deferred income tax (benefit) expense                                                                                             47,967                      (1,792,142   )              (37,077,082   )           (1,744,175   )              (25,048,702  )    
                      Excess tax expense (benefit) related to share-based compensation                                                                  142,677                     1,792,142                   (2,039,550    )           1,934,819                   (1,618,014   )    
                      Change in fair value of derivative instruments                                                                                    35,277,240                  31,588,639                  13,017,962                66,865,879                  (37,402,847  )    
                      Cash (paid) received for derivative settlements, net                                                                              (12,436,333  )              (5,920,791   )              13,753,567                (18,357,124  )              17,087,695        
                      Changes in assets and liabilities:                                                                                                                                                                                                                                
                      Accounts receivable                                                                                                               (704,568     )              (5,968,739   )              8,630,061                 (6,673,307   )              15,545,418        
                      Prepaid expenses and retainers                                                                                                    (1,346,762   )              165,200                     (186,593      )           (1,181,562   )              3,397,860         
                      Accounts payable                                                                                                                  2,365,612                   6,293,506                   (15,436,648   )           8,659,118                   (22,050,677  )    
                      Settlement of asset retirement obligation                                                                                         (1,093,816   )              (244,461     )              (27,368       )           (1,338,277   )              (320,580     )    
                                                                                                                                                                                                                                                                                        
                      Net Cash Provided by Operating Activities                                                                                         16,322,996                  15,687,684                  2,648,326                 32,010,680                  30,186,083        
                                                                                                                                                                                                                                                                                        
 Cash Flows From Investing Activities                                                                                                                                                                                                                                                   
                      Payments to purchase oil and natural gas properties                                                                               (178,718     )              (258,970     )              (537,386      )           (437,688     )              (1,017,434   )    
                      Payments to develop oil and natural gas properties                                                                                (10,824,079  )              (11,898,939  )              (5,839,641    )           (22,723,018  )              (30,302,779  )    
                      Payments to acquire or improve fixed assets                                                                                       (41,442      )              (19,461      )              -                         (60,903      )              -                 
                      Proceeds from divestiture of oil and natural gas properties                                                                       -                           2,000,000                   -                         2,000,000                   -                 
                      Purchase of fixed assets subject to depreciation                                                                                  -                           -                           -                         -                           -                 
                                                                                                                                                                                                                                                                                        
                      Net Cash Used in Investing Activities                                                                                             (11,044,239  )              (10,177,370  )              (6,377,027    )           (21,221,609  )              (31,320,213  )    
                                                                                                                                                                                                                                                                                        
 Cash Flows From Financing Activities                                                                                                                                                                                                                                                   
                      Proceeds from revolving line of credit                                                                                            6,900,000                   13,000,000                  21,500,000                19,900,000                  21,500,000        
                      Payments on revolving line of credit                                                                                              (11,900,000  )              (20,500,000  )              (13,000,000   )           (32,400,000  )              (13,000,000  )    
                      Proceeds from issuance of common stock and warrants                                                                               80,000                      161,269                     -                         241,269                     -                 
                      Proceeds from notes payable                                                                                                       909,467                     -                           -                         909,467                     -                 
                      Payments on notes payable                                                                                                         (151,317     )              -                           -                         (151,317     )              -                 
                      Payment of deferred financing costs                                                                                               (76,887      )              -                           -                         (76,887      )              -                 
                      Reduction of financing lease liabilities                                                                                          (70,288      )              (49,707      )              (72,906       )           (119,995     )              (140,712     )    
                                                                                                                                                                                                                                                                                        
                      Net Cash Used in (Provided by) Investing Activities                                                                               (4,309,025   )              (7,388,438   )              8,427,094                 (11,697,463  )              8,359,288         
                                                                                                                                                                                                                                                                                        
 Net (Decrease) Increase in Cash                                                                                                                        969,732                     (1,878,124   )              4,698,393                 (908,392     )              7,225,158         
 Cash at Beginning of Period                                                                                                                            1,700,510                   3,578,634                   12,531,387                3,578,634                   10,004,622        
                                                                                                                                                                                                                                                                                        
 Cash at End of Period                                                                                                              $                   2,670,242             $     1,700,510              $    17,229,780           $    2,670,242              $    17,229,780        
                                                                                                                                                                                                                                                                                        



 RING ENERGY, INC.                                                                                                             
 Financial Commodity Derivative Positions                                                                                      
 As of August 9, 2021                                                                                                          
                                                                                                                               
                                                          Average        Weighted Avg.     Weighted Avg.     Weighted Avg.     
 Date Entered Into  Production Period   Instrument        Daily Volumes  Put Price         Call Price        Swap Price        
 Crude Oil - WTI                                          (Bbls)         (per Bbl)         (per Bbl)         (per Bbl)         
                                                                                                                               
 02/25/2020         Calendar year 2021  Costless Collars  1,000          $45.00            $54.75                              
 02/25/2020         Calendar year 2021  Costless Collars  1,000          $45.00            $52.71                              
 02/27/2020         Calendar year 2021  Costless Collars  1,000          $40.00            $55.08                              
 03/02/2020         Calendar year 2021  Put               1,500          $40.00                                                
 11/25/2020         Calendar year 2021  Swaps             2,000                                              $45.37            
 12/02/2020         Calendar year 2021  Swaps             500                                                $45.38            
 12/03/2020         Calendar year 2021  Swaps             500                                                $45.00            
 12/04/2020         Calendar year 2021  Swaps             500                                                $45.40            
 12/04/2020         Calendar year 2021  Swaps             500                                                $45.60            
 12/07/2020         Calendar year 2021  Swaps             500                                                $45.96            
                                                                                                                               
 12/04/2020         Calendar year 2022  Swaps             500                                                $44.22            
 12/07/2020         Calendar year 2022  Swaps             500                                                $44.75            
 12/10/2020         Calendar year 2022  Swaps             500                                                $44.97            
 12/17/2020         Calendar year 2022  Swaps             250                                                $45.98            
 01/04/2021         Calendar year 2022  Swaps             250                                                $47.00            
 02/04/2021         Calendar year 2022  Swaps             250                                                $50.05            
 05/11/2021         Calendar year 2022  Swaps             879 ((1))                                          $49.03            
                                                                                                                               
 (1) The notional quantity per the swap contract entered into on May 11, 2021 is for 26,750 barrels of oil per month. The 879 represents the daily amount on an annual basis. 
                                                                                                                               



RING ENERGY, INC.
Non-GAAP Information

Certain financial information included in Ring’s financial results are not
measures of financial performance recognized by accounting principles
generally accepted in the United States, or GAAP. These non-GAAP financial
measures are “Adjusted Net Income”, “Adjusted EBITDA”, “Free Cash
Flow” and “Cash Flow from Operations”. Management uses these non-GAAP
financial measures in its analysis of performance. In addition, Adjusted
EBITDA is a key metric used to determine the Company’s incentive
compensation awards. These disclosures may not be viewed as a substitute for
results determined in accordance with GAAP and are not necessarily comparable
to non-GAAP performance measures which may be reported by other companies.

Reconciliation of Net (Loss) Income to Adjusted Net Income

Adjusted Net Income does not include the estimated after-tax impact of
share-based compensation, ceiling test impairment, and unrealized loss (gain)
on change in fair value of derivatives. Adjusted Net Income is presented
because the timing and amount of these items cannot be reasonably estimated
and affect the comparability of operating results from period to period, and
current periods to prior periods.

                                                                                    Three Months Ended                                                                  Six Months Ended                                   
                                                                                    June 30,                   March 31,                    June 30,                    June 30,                    June 30,               
                                                                                    2021                       2021                         2020                        2021                        2020                   
                                                                                                                                                                                                                           
                                                                                    (Unaudited for All Periods)                                                                                                            
                                                                                                                                                                                                                           
 Net (Loss) Income                                                                  $    (15,887,159  )        $     (19,066,093  )         $    (135,000,066  )        $    (34,953,252  )         $    (91,195,948  )    
                                                                                                                                                                                                                           
                     Share-based compensation                                            351,775                     355,494                     1,317,542                   707,269                     1,991,337         
                     Ceiling test write impairment                                       -                           -                           147,937,943                 -                           147,937,943       
                     Unrealized loss (gain) on change in fair value of derivatives       22,840,907                  25,667,848                  26,771,529                  48,508,755                  (20,315,152  )    
                     Tax impact of adjusted items                                        -                           -                           (39,545,799   )             -                           (29,274,627  )    
                                                                                                                                                                                                                           
 Adjusted Net Income                                                                $    7,305,523             $     6,957,249              $    1,481,149              $    14,262,772             $    9,143,553         
                                                                                                                                                                                                                           
 Weighted-Average Shares Outstanding                                                     99,300,458                  99,092,715                  67,980,794                  99,197,160                  67,987,295        
                                                                                                                                                                                                                           
 Adjusted Net Income per Share                                                      $    0.07                  $     0.07                   $    0.02                   $    0.14                   $    0.13              
                                                                                                                                                                                                                           



 

RING ENERGY, INC.
Non-GAAP Information

Reconciliations of Adjusted EBITDA, Free Cash Flow and Cash Flow from
Operations

The Company also presents the non-GAAP financial measures Adjusted EBITDA and
Free Cash Flow. The Company defines Adjusted EBITDA as net (loss) income plus
net interest expense, unrealized loss on change in fair value of derivatives,
ceiling test impairment, income tax (benefit) expense, depreciation, depletion
and amortization and accretion, asset retirement obligation accretion and
share-based compensation. Company management believes this presentation is
relevant and useful because it helps investors understand Ring’s operating
performance and makes it easier to compare its results with those of other
companies that have different financing, capital and tax structures. Adjusted
EBITDA should not be considered in isolation from or as a substitute for net
income, as an indication of operating performance or cash flows from operating
activities or as a measure of liquidity. Adjusted EBITDA, as Ring calculates
it, may not be comparable to Adjusted EBITDA measures reported by other
companies. In addition, Adjusted EBITDA does not represent funds available for
discretionary use.

The Company defines Free Cash Flow as Adjusted EBITDA (defined above) less net
interest expense (excluding amortization of deferred financing cost) and
capital expenditures. For this purpose, the Company’s definition of capital
expenditures includes costs incurred related to oil and natural gas properties
(such as drilling and infrastructure costs and the lease maintenance costs)
and equipment, furniture and fixtures, but excludes acquisition costs of oil
and gas properties from third parties that are not included in the Company’s
capital expenditures guidance provided to investors. Company management
believes that Free Cash Flow is an important financial performance measure for
use in evaluating the performance and efficiency of its current operating
activities after the impact of accrued capital expenditures and net interest
expense and without being impacted by items such as changes associated with
working capital, which can vary substantially from one period to another.
There is no commonly accepted definition Free Cash Flow within the industry.
Accordingly, Free Cash Flow, as defined and calculated by the Company, may not
be comparable to Free Cash Flow or other similarly named non-GAAP measures
reported by other companies. While the Company includes net interest expense
in the calculation of Free Cash Flow, other mandatory debt service
requirements of future payments of principal at maturity (if such debt is not
refinanced) are excluded from the calculation of Free Cash Flow. These and
other non-discretionary expenditures that are not deducted from Free Cash Flow
would reduce cash available for other uses.

The following tables present (i) a reconciliation of the Company’s net
(loss) income, a GAAP measure, to Adjusted EBITDA and (ii) a reconciliation of
Adjusted EBITDA, a non-GAAP measure, to Free Cash Flow, as both Adjusted
EBITDA and Free Cash Flow are defined by the Company. In addition, a
reconciliation of cash flow from operations is presented.

                                                                                                    Three Months Ended                                                                  Six Months Ended                                   
                                                                                                    June 30,                   March 31,                    June 30,                    June 30,                    June 30,               
                                                                                                    2021                       2021                         2020                        2021                        2020                   
                                                                                                                                                                                                                                           
                                                                                                    (Unaudited for All Periods)                                                                                                            
                                                                                                                                                                                                                                           
 Net (Loss) Income                                                                                  $    (15,887,159  )        $     (19,066,093  )         $    (135,000,066  )        $    (34,953,252  )         $    (91,195,948  )    
                                                                                                                                                                                                                                           
                         Interest expense, net                                                           3,654,528                   3,741,969                   4,253,039                   7,396,497                   8,501,532         
                         Unrealized loss (gain) on change in fair value of derivatives                   22,840,907                  25,667,848                  26,771,529                  48,508,755                  (20,315,152  )    
                         Ceiling test impairment                                                         -                           -                           147,937,943                 -                           147,937,943       
                         Income tax (benefit) expense                                                    190,644                     -                           (39,116,632   )             190,644                     (26,666,716  )    
                         Depreciation, depletion and amortization                                        9,275,126                   8,108,158                   7,338,108                   17,383,284                  21,021,104        
                         Asset retirement obligation accretion                                           184,013                     193,744                     231,367                     377,757                     463,329           
                         Share-based compensation                                                        351,775                     355,494                     1,317,542                   707,269                     1,991,337         
                                                                                                                                                                                                                                           
 Adjusted EBITDA                                                                                    $    20,609,834            $     19,001,120             $    13,732,830             $    39,610,954             $    41,737,429        
                                                                                                                                                                                                                                           
 Adjusted EBITDA Margin                                                                                  43%                         48%                         129%                        45%                         83%               
                                                                                                                                                                                                                                           
 Weighted-Average Shares Outstanding                                                                     99,300,458                  99,092,715                  67,980,794                  99,197,160                  67,987,295        
                                                                                                                                                                                                                                           
 Adjusted EBITDA per Share                                                                          $    0.21                  $     0.19                   $    0.20                   $    0.40                   $    0.61              
                                                                                                                                                                                                                                           
                                                                                                                                                                                                                                           
                                                                                                                                                                                                                                           
                                                                                                    Three Months Ended                                                                  Six Months Ended                                   
                                                                                                    June 30,                   March 31,                    June 30,                    June 30,                    June 30,               
                                                                                                    2021                       2021                         2020                        2021                        2020                   
                                                                                                                                                                                                                                           
                                                                                                    (Unaudited for All Periods)                                                                                                            
                                                                                                                                                                                                                                           
 Adjusted EBITDA                                                                                    $    20,609,834            $     19,001,120             $    13,732,830             $    39,610,954             $    41,737,429        
                                                                                                                                                                                                                                           
                         Net interest expense (excluding amortization of deferred financing costs)       (3,507,304   )              (3,558,942   )              (4,063,956    )             (7,066,246   )              (8,123,367   )    
                         Capital expenditures                                                            (11,456,062  )              (14,525,436  )              (1,823,642    )             (25,981,498  )              (17,796,828  )    
                         Proceeds from divestiture of oil and natural gas properties                     -                           2,000,000                   -                           2,000,000                   -                 
                                                                                                                                                                                                                                           
 Free Cash Flow                                                                                     $    5,646,468             $     2,916,742              $    7,845,232              $    8,563,210              $    15,817,234        
                                                                                                                                                                                                                                           
                                                                                                                                                                                                                                           
                                                                                                                                                                                                                                           
                                                                                                    Three Months Ended                                                                  Six Months Ended                                   
                                                                                                    June 30,                   March 31,                    June 30,                    June 30,                    June 30,               
                                                                                                    2021                       2021                         2020                        2021                        2020                   
                                                                                                    (Unaudited for All Periods)                                                                                                            
                                                                                                                                                                                                                                           
 Net Cash Provided by Operating Activities                                                          $    16,322,996            $     15,687,684             $    2,648,326              $    32,010,680             $    30,186,083        
 Changes in operating assets and liabilities                                                             779,534                     (245,506     )              7,020,548                   534,028                     3,427,979         
                                                                                                                                                                                                                                           
 Cash Flow from Operations                                                                          $    17,102,530            $     15,442,178             $    9,668,874              $    32,544,708             $    33,614,062        

(https://www.globenewswire.com/NewsRoom/AttachmentNg/cee6b8d0-5688-4086-91ec-5916959b76fb)



GlobeNewswire, Inc. 2021
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