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REI - Ring Energy Inc News Story

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Sector
Energy
Size
Small Cap
Market Cap £190.6m
Enterprise Value £409.1m
Revenue £124.6m
Position in Universe 4484th / 7414

Ring Energy Announces Third Quarter 2021 Results

Tue 9th November, 2021 10:16pm
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THE WOODLANDS, Texas, Nov. 09, 2021 (GLOBE NEWSWIRE) -- Ring Energy, Inc.
(NYSE American: REI) (“Ring” or the “Company”) today reported
operational and financial results for the third quarter 2021.

Highlights and Recent Key Items
* Sold 8,243 barrels of oil equivalent per day (“Boe/d”), or 758,387
barrels of oil equivalent (“Boe”) (87% oil), in the third quarter of 2021;
* Reported net income of $14.2 million, or $0.12 per diluted share, and
Adjusted Net Income(1) of $6.8 million, or $0.07 per share, in the third
quarter of 2021;
* Generated Adjusted EBITDA(1) of $19.7 million for the third quarter of 2021;
* Adjusted EBITDA for the nine months ended September 30, 2021 was $59.3
million;
 
* Delivered Net Cash Provided by Operating Activities of $17.5 million and
Free Cash Flow(1) of $2.6 million in the third quarter of 2021; * Net Cash
Provided by Operating Activities and Free Cash Flow for year-to-date September
30, 2021 totaled $49.5 million and $11.2 million, respectively;
 
* Paid down $5.5 million of debt on the Company’s revolving credit facility
during the third quarter 2021; * Reduced long-term debt by $18.0 million for
the first nine months of 2021;
 
* Reduced interest expense by $2.0 million for the nine months ended September
30, 2021 when compared to the similar period in 2020;
* Reduced costly workovers and future operating costs by converting 10 wells
from downhole electrical submersible pumps (”ESPs”) to rod pumps
(“CTRs”) in the third quarter, including seven in the Northwest Shelf
(“NWS”) and three in the Central Basin Platform (“CBP”); * Performed
24 CTRs year-to-date September 30, 2021, including 18 in the NWS and six in
the CBP;
 
* Successfully completed Ring’s Phase III drilling program of four wells
(two in NWS and two in CBP) within budget in the third quarter; * Contributed
less than 1% of total net Boe sales volumes because the wells were brought
online during the last three weeks of the quarter;
* However, to date the wells are realizing strong production results and
exceeding expectations with all wells at 100% working interest; and
 
* Commenced Phase IV drilling program with one well in the NWS, which was
brought online at the end of October, and one well in the CBP, which is
expected to be online by the end of this year.
Mr. Paul D. McKinney, Chairman of the Board and Chief Executive Officer,
commented, “We were pleased to once again generate free cash flow and
strengthen our balance sheet through further debt reduction during the third
quarter of 2021. While our production levels for the period were lower than
anticipated due to certain events that we discuss later in this release, we
were able to generate strong Adjusted EBITDA and operational cash flow through
cost reduction initiatives primarily linked to our CTR program. Our strategic
initiatives designed to drive increased operational excellence, complemented
by our focus on investing in our highest rate-of-return opportunities, solidly
positioned Ring for ongoing success as we close out the year and move into
2022.”

“We continue to benefit from our targeted 2021 drilling programs designed to
not only mitigate the decline in our baseline production but also maximize
long-term cash flow as we capitalize on the current higher commodity price
environment,” continued Mr. McKinney. “We are very pleased with the
results of our drilling programs and look forward to the additional production
as we enter the new year when our 2021 lower-priced hedges roll off. As you
know, our Phase III drilling program included two wells on our NWS acreage, as
well as two CBP wells. These two CBP wells were the first to be drilled in
over two years in that area and we are excited about the upside we continue to
have on our legacy acreage. In October, our estimated Company net production
averaged over 9,000 Boe/d. Our collective strategic efforts remain squarely
focused on generating strong cash flows to further pay down debt while we
continue to capitalize on the organic opportunities within our portfolio,
divest non-strategic assets, and pursue potential accretive acquisitions that
can strengthen our balance sheet.”

Financial Overview: For the third quarter of 2021, the Company reported net
income of $14.2 million, or $0.12 per diluted share, which included
adjustments of $8.2 million before tax for a non-cash unrealized commodity
derivative gain and $0.8 million before tax for share-based compensation.
Excluding the estimated after-tax impact of the adjustments, the Company’s
Adjusted Net Income was $6.8 million, or $0.07 per share. In the second
quarter of 2021, the Company reported a net loss of $15.9 million, or $0.16
per share, which included adjustments of $22.8 million before tax for a
non-cash unrealized commodity derivative loss and $0.4 million before tax 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 third quarter of 2020, Ring reported a net loss of $2.0
million, or $0.03 per share, which included adjustments of $6.2 million before
tax for a non-cash unrealized commodity derivative loss and $0.6 million
before tax for share-based compensation. Excluding the estimated after-tax
impact of these adjustments, Adjusted Net Income in the third quarter of 2020
was $3.4 million, or $0.05 per share.

Adjusted EBITDA was $19.7 million for the third quarter of 2021 versus $20.6
million in the second quarter of 2021 and $19.9 million in the third quarter
of 2020. The slight decrease in Adjusted EBITDA compared to both prior periods
was primarily due to lower oil sales volumes that were substantially offset by
higher oil prices.

Free Cash Flow for the third quarter of 2021 was $2.6 million versus $5.6
million in the second quarter of 2021 primarily due to higher capital
expenditures and lower sales volumes. Third quarter 2021 Free Cash Flow
decreased $8.7 million from $11.3 million for the third quarter of 2020
primarily due to an increase in 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 third quarter of
2021 were 8,243 Boe/d (87% oil), or 758,387 Boe, compared to 8,709 Boe/d (89%
oil), or 792,551 Boe, for the second quarter of 2021, and 9,549 Boe/d (89%
oil), or 878,480 Boe, in the third quarter of 2020. Third quarter 2021 sales
volumes were comprised of 659,247 barrels (“Bbls”) of oil and 594,841
thousand cubic feet (“Mcf”) of natural gas.

Sales volumes for the third quarter of 2021 were partially impacted by new
well completion activities of the Company and an offset operator that
temporarily reduced the production from a number of Ring’s higher producing
wells. The production levels of these wells have recovered in the fourth
quarter to normal levels. Additionally, the Company continued to experience
lower natural gas sales due to certain third-party facility processing
capacity constraints in both the CBP and the NWS areas. In the NWS, the plant
restrictions also reduced oil sales due to higher pressures. Finally, the CTRs
completed during the third quarter resulted in longer-than-anticipated
downtime due to wells being cleaned out.

For the third quarter of 2021, the Company realized an average sales price of
$69.61 per barrel of crude oil and $5.86 per Mcf for natural gas. The combined
average realized sales price for the period was $65.11 per Boe, up 8% versus
$60.26 per Boe for the second quarter of 2021, and up 82% from $35.82 per Boe
in the third quarter of 2020. The average oil price differential the Company
experienced from WTI NYMEX pricing in the third quarter of 2021 was a negative
$1.05 per barrel of crude oil, while the average natural gas price
differential from Henry Hub pricing was a positive $1.43 per Mcf.

Revenues were $49.4 million for the third quarter of 2021 compared to $47.8
million for the second quarter of 2021 and $31.5 million for the third quarter
of 2020. The 3% increase in third quarter 2021 revenues from this year’s
second quarter and the 57% improvement from the third quarter of 2020 were
both driven by higher oil and natural gas prices and increased natural gas
sales volumes that were partially offset by lower oil sales volumes.

Lease Operating Expense (“LOE”): LOE, which includes expense workovers and
facilities maintenance, was $7.0 million, or $9.21 per Boe, in the third
quarter of 2021 versus $7.4 million, or $9.37 per Boe, in the second quarter
of 2021 and $7.8 million, or $8.90 per Boe, for the third quarter of 2020.
Purchasing leased ESPs throughout the year has resulted in lower operating
costs.

Gathering, Transportation and Processing (“GTP”) Costs: GTP costs, which
are associated with natural gas sales, were $1.39 per Boe in the third quarter
of 2021 versus $1.13 per Boe in the second quarter of 2021 and $1.20 per Boe
in the third quarter of 2020. The increase in GTP costs was due to higher
natural gas sales volumes.

Ad Valorem Taxes: Ad valorem taxes were $0.93 per Boe for the third quarter of
2021 compared to $0.89 per Boe in the second quarter of 2021 and $0.91 per Boe
for the third quarter of 2020.

Production Taxes: Production taxes were $2.95 per Boe in the third quarter of
2021 compared to $2.77 per Boe in the second quarter of 2021 and $1.62 per Boe
in third 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 $12.28 per Boe in the third quarter of 2021
versus $11.70 per Boe for the second quarter of 2021 and $12.32 per Boe in the
third quarter of 2020. Asset retirement obligation accretion was $0.24 per Boe
in the third quarter of 2021 compared to $0.23 per Boe for the second quarter
of 2021 and $0.26 per Boe in the third quarter of 2020.

Operating Lease Expense:   Operating lease expense was $83,589 for the third
quarter of 2021 versus $84,790 for the second quarter of 2021 and $295,631 in
the third 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 $3.7 million, or $4.82 per Boe, for the third quarter 2021
versus $3.4 million, or $4.30 per Boe, for the second quarter of 2021 and $1.9
million, or $2.20 per Boe, in the third quarter of 2020. Contributing to the
year-over-year increase in third quarter G&A were higher insurance and legal
costs, the hiring of additional accounting, engineering, land, and operations
personnel, and relocation expenses.

Interest Expense: Interest expense was $3.6 million in the third quarter of
2021 versus $3.7 million for the second quarter 2021 and $4.5 million for the
third quarter of 2020. Interest expense declined year-over-year due to a lower
average daily balance of long-term debt and a lower margin rate for the three
months ended September 30, 2021. The lower margin rate was associated with a
reduced percentage utilization of the borrowing base.

Derivative (Loss) Gain: In the third quarter of 2021, Ring recorded a loss of
$6.7 million on its commodity derivative contracts, including a realized $14.9
million cash commodity derivative loss and an unrealized $8.2 million non-cash
commodity derivative gain. This compared to a net loss of $35.3 million in the
second quarter of 2021, of which $22.8 million was unrealized, and a net loss
of $4.5 million in the third quarter of 2020, of which $6.2 million was
unrealized.

Ring did not add any derivative positions during the three months ended
September 30, 2021. A full listing of the Company’s current outstanding
derivative positions is included in the tables shown later in this release.

Income Tax: The Company recorded a non-cash income tax benefit of $48,701 in
the third quarter 2021 versus an expense of $190,644 in the second quarter of
2021 and a benefit of $486,565 for the third quarter of 2020.

Balance Sheet and Liquidity: Total liquidity at the end of the third quarter
of 2021 was $56.2 million, an increase of 9% from June 30, 2021. Liquidity
consisted of cash and cash equivalents of $2.0 million and $54.2 million of
availability under Ring’s revolving bank credit facility, which includes a
reduction of $0.8 million for letters of credit. On September 30, 2021, the
Company had $295.0 million in borrowings on its revolving credit facility that
has a current borrowing base of $350.0 million. Ring paid down $5.5 million of
debt during the third quarter of 2021, and $18.0 million for the nine months
ended September 30, 2021. The Company is targeting further debt reduction
during the fourth quarter of 2021 and full year 2022.

The next regularly scheduled bank redetermination is underway and expected to
be completed during the fourth quarter. Ring is currently in compliance with
all applicable covenants of its revolving credit facility agreement.

Capital Expenditures and Asset Transfers: During the third quarter of 2021,
capital expenditures were $13.7 million as the Company drilled, completed and
placed on production the four wells of its Phase III program (two wells in NWS
and two wells in CBP, with all wells at 100% working interest) and also
performed 10 CTR projects.

The Phase III program utilized two rigs and all wells were drilled and
completed within budget. The wells in the NWS were 1.0-mile laterals and the
wells in the CBP were 1.5-mile laterals. Upon successful completion of
activities, the Company released the two rigs used for the Phase III program.
To date, these wells are exceeding production expectations with all wells at
100% working interest.

In the second quarter of 2021, capital expenditures were $11.5 million, which
included costs to drill, complete and place on production the three wells of
the Company’s NWS Phase II program (with all wells at 74% working interest)
and perform five CTR projects.

For the nine months ended September 30, 2021, capital expenditures were $39.7
million, which included costs to drill nine horizontal wells (seven in NWS and
two in CBP), and complete and place on production 11 horizontal wells (nine in
NWS and two in CBP). Two of the NWS wells completed in 2021 were drilled in
2020. Also included in year-to-date capital spending for 2021 were costs for
24 CTRs, as well as costs for capital workovers, infrastructure upgrades, land
and other capital expenditures.

Commences Phase IV Drilling Program

In response to a continued improvement in crude oil prices, Ring has commenced
its previously announced Phase IV program to drill two wells, including one in
the NWS (1.0-mile lateral at approximately 75% working interest) and one in
the CBP (1.5-mile lateral at 100% working interest). The NWS 1.0-mile lateral
was placed on production at the end of October and is meeting expectations.
The CBP 1.5-mile lateral well was successfully drilled in October, is awaiting
completion, and is expected to be placed on production by the end of 2021.

Update on Sales Process for Delaware Basin Assets

As previously announced, Ring launched a sales process during the second
quarter of 2021 to divest of its Delaware Basin assets. The Company continues
to be in discussions with several interested parties and will provide further
updates as definitive information is known. Ring anticipates using the net
proceeds from the potential sale of its Delaware Basin assets to further
reduce its debt.

Fourth Quarter 2021 Sales Volumes, Operating Expense and Capital Spending
Guidance

The guidance in the table below represents the Company's current estimate of
the range of fourth quarter of 2021 results. Guidance could be affected by the
factors discussed below in the "Safe Harbor Statement" section.

                                                                Q4                 
                                                                2021               
                                                                                   
 Sales Volumes:                                                                    
             Total (Boe/d)                                      8,800 - 9,200      
             Oil (Bo/d)                                         7,500 - 7,900      
                                                                                   
 Operating Expenses:                                                               
             Lifting cost ((1))(per Boe)                        $10.50 - $11.50    
                                                                                   
 Capital Program:                                                                  
             Number of new wells drilled                        2                  
             Number of new wells completed                      2                  
                                                                                   
             Capital spending ((2))(millions)                   $11 - $15          
                                                                                   
 (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 Wednesday, November 10, 2021 at 11:00 a.m.
ET to discuss its third quarter 2021 operational and financial results. An
updated investor presentation will be posted to the Company’s website prior
to the conference call.

To participate in the conference call, interested parties should dial
833-953-2433 at least five minutes before the call is to begin. Please
reference the “Ring Energy Third 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 “News & Events” page. An audio replay will also be
available on the Company’s website following the call.

About Ring Energy, Inc.

Ring Energy, Inc. is an oil and gas exploration, development, and production
company with current operations focused on the 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

(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.



 RING ENERGY, INC.                                                                                                                                                                                                                  
 Condensed Statements of Operations                                                                                                                                                                                                 
 (Unaudited)                                                                                                                                                                                                                        
                                                                                                                                                                                                                                    
                                                                              Three Months Ended                                                                      Nine Months Ended                                             
                                                                              September 30,                  June 30,                   September 30,                 September 30,                   September 30,                 
                                                                              2021                           2021                       2020                          2021                            2020                          
                                                                                                                                                                                                                                    
 Oil and Natural Gas Revenues                                                 $      49,376,176              $    47,760,102            $      31,466,544             $      136,638,810              $      81,673,465             
                                                                                                                                                                                                                                    
 Costs and Operating Expenses                                                                                                                                                                                                       
 Lease operating expenses                                                            6,983,196                    7,424,488                    7,819,639                     22,634,259                      21,887,356             
 Gathering, transportation and processing costs                                      1,051,163                    897,166                      1,058,372                     2,883,348                       2,833,957              
 Ad valorem taxes                                                                    703,774                      703,775                      800,000                       2,144,800                       2,407,455              
 Oil and natural gas production taxes                                                2,240,759                    2,198,339                    1,427,041                     6,291,860                       3,731,046              
 Depreciation, depletion and amortization                                            9,310,524                    9,275,126                    10,826,989                    26,693,808                      31,848,093             
 Ceiling test impairment                                                             -                            -                            -                             -                               147,937,943            
 Asset retirement obligation accretion                                               182,905                      184,013                      230,784                       560,662                         694,113                
 Operating lease expense                                                             83,589                       84,790                       295,631                       439,896                         876,889                
 General and administrative expense (including share-based compensation)             4,433,251                    3,757,152                    2,496,927                     11,103,394                      9,709,431              
                                                                                                                                                                                                                                    
 Total Costs and Operating Expenses                                                  24,989,161                   24,524,849                   24,955,383                    72,752,027                      221,926,283            
                                                                                                                                                                                                                                    
 Income (Loss) Income from Operations                                                24,387,015                   23,235,253                   6,511,161                     63,886,783                      (140,252,818  )        
                                                                                                                                                                                                                                    
 Other Income (Expense)                                                                                                                                                                                                             
 Interest income                                                                     -                            1                            1                             1                               7                      
 Interest (expense)                                                                  (3,551,462   )               (3,654,529   )               (4,457,250  )                 (10,947,960  )                  (12,958,788   )        
 (Loss) gain on derivative contracts                                                 (6,720,320   )               (35,277,240  )               (4,502,080  )                 (73,586,199  )                  32,900,767             
                                                                                                                                                                                                                                    
 Net Other Income (Expense)                                                          (10,271,782  )               (38,931,768  )               (8,959,329  )                 (84,534,158  )                  19,941,986             
                                                                                                                                                                                                                                    
 (Loss) Income Before Tax Provision                                                  14,115,233                   (15,696,515  )               (2,448,168  )                 (20,647,375  )                  (120,310,832  )        
                                                                                                                                                                                                                                    
 Benefit from (Provision for) Income Taxes                                           48,701                       (190,644     )               486,565                       (141,943     )                  27,153,281             
                                                                                                                                                                                                                                    
 Net (Loss) Income                                                            $      14,163,934              $    (15,887,159  )        $      (1,961,603  )          $      (20,789,318  )           $      (93,157,551   )        
                                                                                                                                                                                                                                    
 Basic (Loss) Earnings per Share                                              $      0.14                    $    (0.16        )        $      (0.03       )          $      (0.21        )           $      (1.37         )        
 Diluted (Loss) Earnings per Share                                            $      0.12                    $    (0.16        )        $      (0.03       )          $      (0.21        )           $      (1.37         )        
                                                                                                                                                                                                                                    
 Basic Weighted-Average Shares Outstanding                                           99,358,504                   99,300,458                   67,980,961                    99,251,532                      67,985,168             
 Diluted Weighted-Average Shares Outstanding                                         121,220,748                  99,300,458                   67,980,961                    99,251,532                      67,985,168             
                                                                                                                                                                                                                                    



 RING ENERGY, INC.                                                                                                                                                                                           
 Condensed Operating Data                                                                                                                                                                                    
 (Unaudited)                                                                                                                                                                                                 
                                                                                                                                                                                                             
                                                                            Three Months Ended                                                        Nine Months Ended                                      
                                                                                September 30,             June 30,                September 30,            September 30,                 September 30,       
                                                                                2021                      2021                    2020                     2021                          2020                
                                                                                                                                                                                                             
 Net sales volumes:                                                                                                                                                                                          
 Oil (Bbls)                                                                     659,247                   702,408                 781,626                  1,971,776                     2,066,980           
 Natural gas (Mcf)                                                              594,841                   540,857                 581,123                  1,773,506                     1,764,165           
 Total oil and natural gas (Boe) ((1))                                          758,387                   792,551                 878,480                  2,267,360                     2,361,008           
 % Oil                                                                          87       %                89       %              89       %               87         %                  88         %        
                                                                                                                                                                                                             
 Average daily equivalent sales (Boe/d)                                         8,243                     8,709                   9,549                    8,305                         8,617               
                                                                                                                                                                                                             
 Average realized sales prices:                                                                                                                                                                              
 Oil ($/Bbl)                                                                $   69.61                 $   65.00               $   38.80               $    64.37                    $    38.40               
 Natural gas ($/Mcf)                                                            5.86                      3.90                    1.96                     5.48                          1.30                
 Barrel of oil equivalent ($/Boe)                                           $   65.11                 $   60.26               $   35.82               $    60.26                    $    34.59               
                                                                                                                                                                                                             
 Average costs and expenses per Boe ($/Boe):                                                                                                                                                                 
 Lease operating expenses                                                   $   9.21                  $   9.37                $   8.90                $    9.98                     $    9.27                
 Gathering, transportation and processing costs                                 1.39                      1.13                    1.20                     1.27                          1.20                
 Ad valorem taxes                                                               0.93                      0.89                    0.91                     0.95                          1.02                
 Oil and natural gas production taxes                                           2.95                      2.77                    1.62                     2.77                          1.58                
 Depreciation, depletion and amortization                                       12.28                     11.70                   12.32                    11.77                         13.49               
 Asset retirement obligation accretion                                          0.24                      0.23                    0.26                     0.25                          0.29                
 Operating lease expense                                                        0.11                      0.11                    0.34                     0.19                          0.37                
 General and administrative expense (including share-based compensation)        5.85                      4.74                    2.84                     4.90                          4.11                
 General and administrative expense (excluding share-based compensation)        4.82                      4.30                    2.20                     4.24                          3.03                
                                                                                                                                                                                                             
 (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. 
                                                                                                                                                                                                             
                                                                                                                                                                                                             
                                                                                                                                                                                                             



 RING ENERGY, INC.                                                                                                                                                                                                                                                      
 Condensed Balance Sheets                                                                                                                                                                                                                                               
                                                                                                                                                                                                                                                                        
                                                                                                                                                                                  (Unaudited)                                                                           
                                                                                                                                                                                  September 30,                                             December 31,                
                                                                                                                                                                                  2021                                                      2020                        
                                                                                                                                                                                                                                                                        
 ASSETS                                                                                                                                                                                                                                                                 
 Current Assets                                                                                                                                                                                                                                                         
 Cash and cash equivalents                                                                                                                                                        $                                  2,046,946              $      3,578,634            
 Accounts receivable                                                                                                                                                                                                 20,306,264                    14,997,979           
 Joint interest billing receivable                                                                                                                                                                                   1,672,334                     1,327,262            
 Derivative receivable                                                                                                                                                                                               -                             499,906              
 Prepaid expenses and retainers                                                                                                                                                                                      1,298,801                     396,109              
 Total Current Assets                                                                                                                                                                                                25,324,345                    20,799,890           
                                                                                                                                                                                                                                                                        
 Properties and Equipment                                                                                                                                                                                                                                               
 Oil and natural gas properties, full cost method                                                                                                                                                                    872,258,987                   836,514,815          
 Financing lease asset subject to depreciation                                                                                                                                                                       1,422,487                     858,513              
 Fixed assets subject to depreciation                                                                                                                                                                                2,130,523                     1,520,890            
 Total Properties and Equipment                                                                                                                                                                                      875,811,997                   838,894,218          
 Accumulated depreciation, depletion and amortization                                                                                                                                                                (225,744,692  )               (200,111,658  )      
 Net Properties and Equipment                                                                                                                                                                                        650,067,305                   638,782,560          
                                                                                                                                                                                                                                                                        
 Operating lease asset                                                                                                                                                                                               1,344,378                     1,494,399            
 Deferred financing costs                                                                                                                                                                                            1,882,815                     2,379,348            
                                                                                                                                                                                                                                                                        
 TOTAL ASSETS                                                                                                                                                                     $                                  678,618,843            $      663,456,197          
                                                                                                                                                                                                                                                                        
 LIABILITIES AND STOCKHOLDERS' EQUITY                                                                                                                                                                                                                                   
 Current Liabilities                                                                                                                                                                                                                                                    
 Accounts payable                                                                                                                                                                 $                                  45,259,500             $      32,500,081           
 Financing lease liability                                                                                                                                                                                           385,866                       295,311              
 Operating lease liability                                                                                                                                                                                           268,512                       859,017              
 Derivative liabilities                                                                                                                                                                                              38,402,944                    3,287,328            
 Notes payable                                                                                                                                                                                                       857,151                       -                    
 Total Current Liabilities                                                                                                                                                                                           85,173,973                    36,941,737           
                                                                                                                                                                                                                                                                        
 Deferred income taxes                                                                                                                                                                                               141,943                       -                    
 Revolving line of credit                                                                                                                                                                                            295,000,000                   313,000,000          
 Financing lease liability, less current portion                                                                                                                                                                     393,340                       126,857              
 Operating lease liability, less current portion                                                                                                                                                                     1,212,239                     635,382              
 Derivative liabilities                                                                                                                                                                                              6,061,724                     869,273              
 Asset retirement obligations                                                                                                                                                                                        14,998,130                    17,117,135           
                                                                                                                                                                                                                                                                        
 Total Liabilities                                                                                                                                                                                                   402,981,349                   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; 99,359,938 shares and 85,568,287 shares issued and outstanding, respectively                                                                        99,360                        85,568               
 Additional paid-in capital                                                                                                                                                                                          552,598,622                   550,951,415          
 Accumulated deficit                                                                                                                                                                                                 (277,060,488  )               (256,271,170  )      
                                                                                                                                                                                                                                                                        
 Total Stockholders' Equity                                                                                                                                                                                          275,637,494                   294,765,813          
                                                                                                                                                                                                                                                                        
 TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                                                                                                                                       $                                  678,618,843            $      663,456,197          
                                                                                                                                                                                                                                                                        



 RING ENERGY, INC.                                                                                                                                                                                                                                                                                     
 Condensed Statements of Cash Flows                                                                                                                                                                                                                                                                    
 (Unaudited)                                                                                                                                                                                                                                                                                           
                                                                                                                                                                                                                                                                                                       
                                                                                                                                    Three Months Ended                                                                                    Nine Months Ended                                            
                                                                                                                                    September 30,                               June 30,                   September 30,                  September 30,                   September 30,                
                                                                                                                                    2021                                        2021                       2020                           2021                            2020                         
                                                                                                                                                                                                                                                                                                       
 Cash Flows From Operating Activities                                                                                                                                                                                                                                                                  
                      Net (loss) income                                                                                             $                   14,163,934              $    (15,887,159  )        $      (1,961,603   )          $      (20,789,318  )           $      (93,157,551  )        
                      Adjustments to reconcile net (loss) income to net cash provided by operating activities:                                                                                                                                                                                         
                      Depreciation, depletion and amortization                                                                                          9,310,524                    9,275,126                    10,826,989                     26,693,808                      31,848,093            
                      Ceiling test impairment                                                                                                           -                            -                            -                              -                               147,937,943           
                      Accretion expense                                                                                                                 182,905                      184,013                      230,784                        560,662                         694,113               
                      Amortization of deferred financing costs                                                                                          166,282                      147,224                      189,083                        496,533                         567,248               
                      Share-based compensation                                                                                                          777,461                      351,775                      565,819                        1,484,730                       2,557,156             
                      Deferred income tax (benefit) expense                                                                                             1,886,118                    47,967                       (525,218     )                 141,943                         (25,573,920  )        
                      Excess tax expense (benefit) related to share-based compensation                                                                  (1,934,819   )               142,677                      38,653                         -                               (1,579,361   )        
                      (Gain) loss on derivative contracts                                                                                               6,720,320                    35,277,240                   4,502,080                      73,586,199                      (32,900,767  )        
                      Cash (paid) received for derivative settlements, net                                                                              (14,921,008  )               (12,436,333  )               1,726,373                      (33,278,132  )                  18,814,068            
                      Changes in assets and liabilities:                                                                                                                                                                                                                                               
                      Accounts receivable                                                                                                               1,656,229                    (704,568     )               (5,678,392   )                 (5,017,078   )                  9,867,026             
                      Prepaid expenses and retainers                                                                                                    278,870                      (1,346,762   )               85,785                         (902,692     )                  3,483,645             
                      Accounts payable                                                                                                                  (329,555     )               2,365,612                    4,824,895                      8,329,563                       (17,225,782  )        
                      Settlement of asset retirement obligation                                                                                         (444,502     )               (1,093,816   )               (108,025     )                 (1,782,779   )                  (428,605     )        
                                                                                                                                                                                                                                                                                                       
                      Net Cash Provided by Operating Activities                                                                                         17,512,759                   16,322,996                   14,717,223                     49,523,439                      44,903,306            
                                                                                                                                                                                                                                                                                                       
 Cash Flows From Investing Activities                                                                                                                                                                                                                                                                  
                      Payments to purchase oil and natural gas properties                                                                               (141,468     )               (178,718     )               (171,999     )                 (579,156     )                  (1,189,433   )        
                      Payments to develop oil and natural gas properties                                                                                (11,957,917  )               (10,824,079  )               (3,283,558   )                 (34,680,935  )                  (33,586,337  )        
                      Payments to acquire or improve fixed assets                                                                                       (548,730     )               (41,442      )               -                              (609,633     )                  -                     
                      Proceeds from divestiture of oil and natural gas properties                                                                       -                            -                            4,500,000                      2,000,000                       4,500,000             
                                                                                                                                                                                                                                                                                                       
                      Net Cash Used in Investing Activities                                                                                             (12,648,115  )               (11,044,239  )               1,044,443                      (33,869,724  )                  (30,275,770  )        
                                                                                                                                                                                                                                                                                                       
 Cash Flows From Financing Activities                                                                                                                                                                                                                                                                  
                      Proceeds from revolving line of credit                                                                                            14,500,000                   6,900,000                    -                              34,400,000                      21,500,000            
                      Payments on revolving line of credit                                                                                              (20,000,000  )               (11,900,000  )               (15,000,000  )                 (52,400,000  )                  (28,000,000  )        
                      Proceeds from issuance of common stock and warrants                                                                               -                            80,000                       -                              241,269                         -                     
                      Proceeds from notes payable                                                                                                       323,671                      909,467                      -                              1,233,138                       -                     
                      Payments on notes payable                                                                                                         (224,670     )               (151,317     )               -                              (375,987     )                  -                     
                      Payment of deferred financing costs                                                                                               -                            (76,887      )               -                              (76,887      )                  -                     
                      Reduction of financing lease liabilities                                                                                          (86,941      )               (70,288      )               (70,629      )                 (206,936     )                  (211,341     )        
                                                                                                                                                                                                                                                                                                       
                      Net Cash Used in (Provided by) Investing Activities                                                                               (5,487,940   )               (4,309,025   )               (15,070,629  )                 (17,185,403  )                  (6,711,341   )        
                                                                                                                                                                                                                                                                                                       
 Net Change in Cash                                                                                                                                     (623,296     )               969,732                      691,037                        (1,531,688   )                  7,916,195             
 Cash at Beginning of Period                                                                                                                            2,670,242                    1,700,510                    17,229,780                     3,578,634                       10,004,622            
                                                                                                                                                                                                                                                                                                       
 Cash at End of Period                                                                                                              $                   2,046,946               $    2,670,242             $      17,920,817              $      2,046,946                $      17,920,817            
                                                                                                                                                                                                                                                                                                       

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                                                                     Nine Months Ended                                            
                                                                                    September 30,                 June 30,                   September 30,                 September 30,                   September 30,                
                                                                                           2021                        2021                  2020                                 2021                     2020                         
                                                                                    (Unaudited for All Periods)                                                                                                                         
                                                                                                                                                                                                                                        
 Net (Loss) Income                                                                  $      14,163,934             $    (15,887,159  )        $      (1,961,603  )          $      (20,789,318  )           $      (93,157,551  )        
                                                                                                                                                                                                                                        
                     Share-based compensation                                              777,461                     351,775                      565,819                       1,484,730                       2,557,156             
                     Ceiling test write impairment                                         -                           -                            -                             -                               147,937,943           
                     Unrealized loss (gain) on change in fair value of derivatives         (8,200,688  )               22,840,907                   6,228,453                     40,308,067                      (14,086,699  )        
                     Tax impact of adjusted items                                          25,612                      (281,690     )               (1,446,501  )                 (256,078     )                  (29,041,348  )        
                                                                                                                                                                                                                                        
 Adjusted Net Income                                                                $      6,766,319              $    7,023,833             $      3,386,168              $      20,747,401               $      14,209,501            
                                                                                                                                                                                                                                        
 Weighted-Average Shares Outstanding                                                       99,358,504                  99,300,458                   67,980,961                    99,251,532                      67,985,168            
                                                                                                                                                                                                                                        
 Adjusted Net Income per Share                                                      $      0.07                   $    0.07                  $      0.05                   $      0.21                     $      0.21                  
                                                                                                                                                                                                                                        

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                                                                      Nine Months Ended                                            
                                                                                                    September 30,                  June 30,                   September 30,                 September 30,                   September 30,                
                                                                                                           2021                         2021                         2020                          2021                            2020                  
                                                                                                    (Unaudited for All Periods)                                                                                                                          
                                                                                                                                                                                                                                                         
 Net (Loss) Income                                                                                  $      14,163,934              $    (15,887,159  )        $      (1,961,603  )          $      (20,789,318  )           $      (93,157,551  )        
                                                                                                                                                                                                                                                         
                         Interest expense, net                                                             3,551,462                    3,654,528                    4,457,249                     10,947,959                      12,958,781            
                         Unrealized loss (gain) on change in fair value of derivatives                     (8,200,688   )               22,840,907                   6,228,453                     40,308,067                      (14,086,699  )        
                         Ceiling test impairment                                                           -                            -                            -                             -                               147,937,943           
                         Income tax (benefit) expense                                                      (48,701      )               190,644                      (486,565    )                 141,943                         (27,153,281  )        
                         Depreciation, depletion and amortization                                          9,310,524                    9,275,126                    10,826,989                    26,693,808                      31,848,093            
                         Asset retirement obligation accretion                                             182,905                      184,013                      230,784                       560,662                         694,113               
                         Share-based compensation                                                          777,461                      351,775                      565,819                       1,484,730                       2,557,156             
                                                                                                                                                                                                                                                         
 Adjusted EBITDA                                                                                    $      19,736,897              $    20,609,834            $      19,861,126             $      59,347,851               $      61,598,555            
                                                                                                                                                                                                                                                         
 Adjusted EBITDA Margin                                                                                    40           %               43           %               63          %                 43           %                  75           %        
                                                                                                                                                                                                                                                         
 Weighted-Average Shares Outstanding                                                                       99,358,504                   99,300,458                   67,980,961                    99,251,532                      67,985,168            
                                                                                                                                                                                                                                                         
 Adjusted EBITDA per Share                                                                          $      0.20                    $    0.21                  $      0.29                   $      0.60                     $      0.91                  
                                                                                                                                                                                                                                                         
                                                                                                                                                                                                                                                         
                                                                                                                                                                                                                                                         
                                                                                                                                                                                                                                                         
                                                                                                    Three Months Ended                                                                      Nine Months Ended                                            
                                                                                                    September 30,                  June 30,                   September 30,                 September 30,                   September 30,                
                                                                                                           2021                         2021                         2020                          2021                            2020                  
                                                                                                    (Unaudited for All Periods)                                                                                                                          
                                                                                                                                                                                                                                                         
 Adjusted EBITDA                                                                                    $      19,736,897              $    20,609,834            $      19,861,126             $      59,347,851               $      61,598,555            
                                                                                                                                                                                                                                                         
                         Net interest expense (excluding amortization of deferred financing costs)         (3,385,180   )               (3,507,304   )               (4,268,166  )                 (10,451,426  )                  (12,391,533  )        
                         Capital expenditures                                                              (13,720,336  )               (11,456,062  )               (4,305,557  )                 (39,701,834  )                  (22,102,385  )        
                         Proceeds from divestiture of oil and natural gas properties                       -                            -                            -                             2,000,000                       -                     
                                                                                                                                                                                                                                                         
 Free Cash Flow                                                                                     $      2,631,381               $    5,646,468             $      11,287,403             $      11,194,591               $      27,104,637            
                                                                                                                                                                                                                                                         
                                                                                                                                                                                                                                                         
                                                                                                                                                                                                                                                         
                                                                                                                                                                                                                                                         
                                                                                                    Three Months Ended                                                                      Nine Months Ended                                            
                                                                                                    September 30,                  June 30,                   September 30,                 September 30,                   September 30,                
                                                                                                           2021                         2021                         2020                          2021                            2020                  
                                                                                                    (Unaudited for All Periods)                                                                                                                         
                                                                                                                                                                                                                                                         
 Net Cash Provided by Operating Activities                                                          $      17,512,759              $    16,322,996            $      14,717,223             $      49,523,439               $      44,903,306            
 Changes in operating assets and liabilities                                                               (1,161,042   )               779,534                      875,737                       (627,014     )                  4,303,716             
                                                                                                                                                                                                                                                         
 Cash Flow from Operations                                                                          $      16,351,717              $    17,102,530            $      15,592,960             $      48,896,425               $      49,207,022            
                                                                                                                                                                                                                                                         



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