Ring Energy Announces Accretive Bolt-On Acquisition
Ring Energy (NYSE American: REI) has announced an agreement to acquire Central Basin Platform assets from Lime Rock Resources IV for $100 million. The deal includes $80 million in upfront cash, $10 million deferred payment, and up to 7.4 million Ring common stock shares.
The acquisition, effective October 1, 2024, and expected to close by Q1 2025, includes 17,700 net acres in Andrews County, Texas, producing approximately 2,300 boe/d (>80% Oil) from 101 gross wells. The assets are valued at $120 million PD PV-10 based on February 2025 NYMEX pricing.
Key highlights include highly accretive metrics, operational synergies with Ring's existing footprint, increased free cash flow generation, and over 40 gross locations for immediate capital deployment. The transaction represents Ring's fourth acquisition since 2019, totaling approximately $940 million in assets.
Ring Energy (NYSE American: REI) ha annunciato un accordo per acquisire gli asset della Central Basin Platform da Lime Rock Resources IV per 100 milioni di dollari. L'accordo prevede 80 milioni di dollari in contante upfront, 10 milioni di dollari come pagamento differito e fino a 7,4 milioni di azioni ordinarie di Ring.
L'acquisizione, che entrerà in vigore il 1 ottobre 2024 e si prevede si concluderà entro il primo trimestre del 2025, include 17.700 acri netti nella contea di Andrews, Texas, producendo circa 2.300 boe/d (>80% petrolio) da 101 pozzi lordi. Gli asset sono valutati 120 milioni di dollari PD PV-10 basati sui prezzi NYMEX di febbraio 2025.
I punti salienti includono metriche altamente accrescitrici, sinergie operative con l'attuale footprint di Ring, aumento della generazione di flusso di cassa libero e oltre 40 posizioni lorde per un immediato impiego di capitale. La transazione rappresenta la quarta acquisizione di Ring dal 2019, per un totale di circa 940 milioni di dollari in asset.
Ring Energy (NYSE American: REI) ha anunciado un acuerdo para adquirir activos de la Central Basin Platform de Lime Rock Resources IV por 100 millones de dólares. El acuerdo incluye 80 millones de dólares en efectivo por adelantado, 10 millones de dólares como pago diferido y hasta 7,4 millones de acciones comunes de Ring.
La adquisición, efectiva el 1 de octubre de 2024 y se espera que se cierre en el primer trimestre de 2025, incluye 17,700 acres netos en el condado de Andrews, Texas, produciendo aproximadamente 2,300 boe/d (>80% petróleo) de 101 pozos brutos. Los activos están valorados en 120 millones de dólares PD PV-10 basados en los precios de NYMEX de febrero de 2025.
Los aspectos más destacados incluyen métricas altamente accretivas, sinergias operativas con la huella existente de Ring, generación de flujo de caja libre incrementada y más de 40 ubicaciones brutas para un despliegue inmediato de capital. La transacción representa la cuarta adquisición de Ring desde 2019, totalizando aproximadamente 940 millones de dólares en activos.
링 에너지 (NYSE American: REI)는 1억 달러에 라임 록 리소스 IV로부터 중앙 분지 플랫폼 자산을 인수하기 위한 계약을 발표했습니다. 이 거래는 8천만 달러의 선불 현금, 1천만 달러의 이연 지급금, 그리고 최대 740만 주의 링 보통주를 포함합니다.
인수는 2024년 10월 1일부터 효력이 발생하며, 2025년 1분기까지 마무리될 것으로 예상됩니다. 이 거래에는 텍사스 앤드류스 카운티의 1만 7천 7백 에이커가 포함되며, 101개의 총 유정에서 약 2,300 boe/d (>80% 원유)를 생산합니다. 이 자산은 2025년 2월 NYMEX 가격을 기준으로 1억 2천만 달러 PD PV-10으로 평가됩니다.
주요 하이라이트는 매우 높은 수익성 지표, 링의 기존 사업과의 운영 시너지, 증가된 자유 현금 흐름 생성, 그리고 즉각적인 자본 배치를 위한 40개 이상의 총 위치를 포함합니다. 이 거래는 2019년 이후 링의 네 번째 인수로, 총 9억 4천만 달러의 자산을 포함합니다.
Ring Energy (NYSE American: REI) a annoncé un accord pour acquérir des actifs de la Central Basin Platform auprès de Lime Rock Resources IV pour 100 millions de dollars. L'accord comprend 80 millions de dollars en espèces à l'avance, 10 millions de dollars de paiement différé, et jusqu'à 7,4 millions d'actions ordinaires de Ring.
L'acquisition, effective le 1er octobre 2024 et prévue pour être finalisée au premier trimestre 2025, comprend 17 700 acres nets dans le comté d'Andrews, au Texas, produisant environ 2 300 boe/j (>80% pétrole) à partir de 101 puits bruts. Les actifs sont évalués à 120 millions de dollars PD PV-10 sur la base des prix NYMEX de février 2025.
Les points clés incluent des métriques très accretives, des synergies opérationnelles avec l'empreinte existante de Ring, une génération accrue de flux de trésorerie libre, et plus de 40 emplacements bruts pour un déploiement immédiat de capital. La transaction représente la quatrième acquisition de Ring depuis 2019, totalisant environ 940 millions de dollars d'actifs.
Ring Energy (NYSE American: REI) hat eine Vereinbarung zur Übernahme von Central Basin Platform-Assets von Lime Rock Resources IV für 100 Millionen Dollar bekannt gegeben. Das Geschäft umfasst 80 Millionen Dollar in bar, 10 Millionen Dollar als aufgeschobene Zahlung und bis zu 7,4 Millionen Ring-Stammaktien.
Die Übernahme tritt am 1. Oktober 2024 in Kraft und soll bis zum ersten Quartal 2025 abgeschlossen sein. Sie umfasst 17.700 Netto-Acres im Andrews County, Texas, und produziert ungefähr 2.300 boe/d (>80% Öl) aus 101 Brutto-Bohrlöchern. Die Vermögenswerte werden auf 120 Millionen Dollar PD PV-10 basierend auf den NYMEX-Preisen von Februar 2025 geschätzt.
Wichtige Highlights sind hochakretive Kennzahlen, operationale Synergien mit dem bestehenden Footprint von Ring, erhöhte Generierung von freiem Cashflow und über 40 Brutto-Standorte für sofortige Kapitalbereitstellung. Die Transaktion stellt Rings vierte Übernahme seit 2019 dar, mit einem Gesamtwert von etwa 940 Millionen Dollar an Vermögenswerten.
- Acquisition valued at <85% of Proved Developed PV-10 ($120M)
- High oil-weighted production (>80%) with 2,300 boe/d
- Adds >40 high-return drilling locations
- Expected $34M in 2025 Adjusted EBITDA
- 17,700 net acres (100% HBP) adjacent to existing operations
- Projected operational cost savings through synergies
- Additional debt burden from $80M upfront cash payment
- Potential shareholder dilution from 7.4M new shares
- Deferred payment obligation of $10M due in 9 months
Insights
Ring Energy's $100 million acquisition of Lime Rock's Central Basin Platform assets represents a significant strategic move for this small-cap producer, effectively putting approximately 38% of its current market capitalization to work in an accretive transaction.
The deal metrics appear compelling on several fronts. At less than 85% of Proved Developed PV-10 value and approximately 2.9x forward EBITDA (based on projected
The transaction structure is noteworthy:
Ring's operational track record with acquisitions provides credibility to management's integration plans. Their previous Founders acquisition demonstrated meaningful operational improvements:
- Production increase of
40% from the acquired asset base - Per-barrel lifting cost reduction of approximately
20% - Debt reduction exceeding the original cash purchase price
The contiguous acreage position creates immediate opportunities for operational synergies, particularly in field operations, water handling, and shared infrastructure. These high-margin, shallow-decline conventional assets (2,300 boe/d from 101 wells) should generate substantial free cash flow with minimal maintenance capital requirements.
For investors, this transaction accelerates Ring's transition toward becoming a more substantial Permian operator with greater scale, improved capital efficiency, and enhanced free cash flow generation. However, the increased leverage in the near term bears monitoring, as does execution risk during the integration phase.
Ring Energy's acquisition of Lime Rock's Central Basin Platform assets represents a technically sound consolidation play in one of the most stable and predictable producing regions of the Permian Basin. The Central Basin Platform is characterized by its conventional San Andres formation - a carbonate reservoir with decades of production history and well-understood performance characteristics.
The 17,700 net acres are particularly valuable because they're 100% held by production, eliminating leasehold expiration concerns that often pressure development timing. The contiguous nature of these assets with Ring's existing operations creates immediate field-level synergies in areas like:
- Shared field personnel and equipment
- Consolidated water handling infrastructure
- Optimized artificial lift systems
- Streamlined maintenance programs
- Enhanced negotiating power with service providers
The current production profile (2,300 boe/d from 101 wells) indicates mature, stable assets with modest per-well production (~23 boe/d/well). While this might appear underwhelming, these San Andres wells typically exhibit decline rates of only
Beyond the stated 40 gross locations, the reference to "multiple horizontal targets" suggests potential upside in zones like the Clearfork, Tubb, Glorieta, and potentially deeper Wolfcamp formations. The San Andres alone offers multi-zone potential with upper, middle, and lower intervals that can sometimes be exploited separately.
At approximately
This acquisition reinforces Ring's identity as a conventional-focused operator in an industry increasingly dominated by unconventional players. These lower-decline, longer-life assets typically carry lower carbon intensity per barrel, potentially positioning Ring more favorably as ESG considerations gain importance in energy investment decisions.
~ Capturing Synergies and Expanding Central Basin Platform Operations ~
~ Announces Timing of Q4 and FY 2024 Earnings Release and Conference Call ~
THE WOODLANDS, Texas, Feb. 26, 2025 (GLOBE NEWSWIRE) -- Ring Energy, Inc. (NYSE American: REI) (“Ring” or the “Company”) today announced it has entered into an agreement to acquire the Central Basin Platform (“CBP”) assets of Lime Rock Resources IV, LP (“Lime Rock”) for
Lime Rock’s CBP acreage is in Andrews County, Texas, where the majority of the acreage directly offsets Ring’s core Shafter Lake operations, and the remaining acreage is prospective for multiple horizontal targets and exposes the Company to new active plays. The transaction represents another opportunity for the Company to seamlessly integrate strategic, high-quality assets with Ring’s existing operations and create shareholder value through improved operations and synergy capture. The Lime Rock position has been a key target for Ring as the Company has historically sought to consolidate producing assets in core counties on the CBP defined by shallow declines, high margin production and undeveloped inventory that immediately competes for capital. Additionally, these assets add significant near-term opportunities for field level optimization and cost savings that are core competencies of Ring’s operating team.
Transaction Highlights
- Highly Accretive CBP Acquisition: Accretive to key Ring per share financial and operating metrics, and attractively valued at less than
85% of Proved Developed (“PD”) PV-101,2; - Increased Scale and Operational Synergies: Expands legacy CBP footprint with seamless integration and identified cost reduction opportunities;
- Meaningful Adjusted Free Cash Flow (“AFCF”)1 Generation: Higher AFCF, shallow decline and reduced reinvestment rate accelerates debt reduction;
- Strengthens High-Return Inventory Portfolio: Improves inventory of proven drilling locations with superior economics in active development areas; and
- Creates a Stronger and More Resilient Company: Solidifies position as a leading conventional Permian consolidator while strengthening the operational and financial base.
Mr. Paul D. McKinney, Chairman of the Board and Chief Executive Officer, commented, “This is a unique opportunity to capture high-quality, oil-weighted assets that generate significant free cash flow in a privately negotiated transaction. Today’s announcement is another example of our proven strategy to create value for our shareholders through accretive M&A. This acquisition not only increases our scale, but it also enhances our portfolio of high-return drilling locations and accelerates the Company’s ability to pay down debt. We look forward to quickly integrating the assets into our existing operations and applying our extensive expertise to optimally develop the inventory of horizontal targets afforded by the transaction.”
Mr. McKinney continued, “For the Lime Rock transaction, we expect to run the same playbook as our highly successful Founders’ acquisition announced in 2023, which has outperformed nearly all our initial underwriting assumptions. Since closing, Ring has increased the Founders’ production base by greater than
Asset Highlights
- ~17,700 net acres (
100% HBP) contiguous to Ring’s existing footprint; - 2,300 boe/d (>
80% Oil) of low-decline average Q3 2024 net production from ~101 gross wells; $120 million of oil-weighted PD PV-101,2 based on February 19, 2025 NYMEX strip pricing;- >40 gross locations that immediately compete for capital; and
$34 million of 2025E Adjusted EBITDA1 implies an attractive valuation for shareholders.
Transaction Consideration
The purchase price of the acquisition is
Advisors
Greenhill, a Mizuho affiliate, acted as sole financial advisor to Ring in connection with the acquisition and Jones & Keller, P.C. served as legal counsel. Truist Securities served as financial advisor to Lime Rock Resources and Kirkland & Ellis LLP served as legal counsel.
Q4 and FY 2024 Earnings Conference Call Information
Ring plans to issue its fourth quarter and full year 2024 earnings release after the close of trading on Wednesday, March 5, 2025. The Company has scheduled a conference call on Thursday, March 6, 2025, at 11:00 a.m. ET (10:00 a.m. CT) to discuss its fourth quarter and full year 2024 operational and financial results, the Lime Rock transaction, and its outlook for 2025. To participate, interested parties should dial 833-953-2433 at least five minutes before the call is to begin. Please reference the “Ring Energy Earnings Conference Call”. International callers may participate by dialing 412-317-5762. The call will also be webcast and available on Ring’s website at www.ringenergy.com under “Investors” on the “News & Events” page. An audio replay will also be available on the Company’s website following the call.
About Ring Energy, Inc.
Ring Energy, Inc. is an oil and gas exploration, development, and production company with current operations focused on the development of its Permian Basin assets. For additional information, please visit www.ringenergy.com.
Non-GAAP Information
Certain financial information utilized by the Company are not measures of financial performance recognized by accounting principles generally accepted in the United States (“GAAP”).
The Company defines “Adjusted EBITDA” as net income (loss) plus net interest expense (including interest income and expense), unrealized loss (gain) on change in fair value of derivatives, ceiling test impairment, income tax (benefit) expense, depreciation, depletion and amortization, asset retirement obligation accretion, transaction costs for executed acquisitions and divestitures (A&D), share-based compensation, loss (gain) on disposal of assets, and backing out the effect of other income. Company management believes Adjusted EBITDA 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 cannot provide a reconciliation of 2025E Adjusted EBITDA without unreasonable efforts because it is unable to predict with reasonable certainty the ultimate outcome of certain significant items required for reconciliation. These items are uncertain, depend on various factors and could have a material impact on GAAP reported results.
The Company defines “Adjusted Free Cash Flow” or “AFCF” as Net Cash Provided by Operating Activities less changes in operating assets and liabilities (as reflected on our Condensed Statement of Cash Flows), plus transaction costs for executed acquisitions and divestitures (A&D), current income tax expense (benefit), proceeds from divestitures of equipment for oil and natural gas properties, loss (gain) on disposal of assets, and less capital expenditures, bad debt expense, and other income. For this purpose, our definition of capital expenditures includes costs incurred related to oil and natural gas properties (such as drilling and infrastructure costs and lease maintenance costs) but excludes acquisition costs of oil and gas properties from third parties that are not included in our capital expenditures guidance provided to investors. Our management believes that Adjusted Free Cash Flow is an important financial performance measure for use in evaluating the performance and efficiency of our current operating activities after the impact of capital expenditures and net interest expense (including interest income and expense, excluding amortization of deferred financing costs) and without being impacted by items such as changes associated with working capital, which can vary substantially from one period to another. Other companies may use different definitions of Adjusted Free Cash Flow.
PV-10 is a non-GAAP financial measure that differs from a financial measure under GAAP known as “standardized measure of discounted future net cash flows” in that PV-10 is calculated without including future income taxes. The Company believes the presentation of PV-10 provides useful information because it is widely used by investors in evaluating oil and natural gas companies without regard to specific income tax characteristics of such entities. PV-10 is not intended to represent the current market value of the Company’s estimated proved reserves. PV-10 should not be considered in isolation or as a substitute for the standardized measure as defined under GAAP. The Company also presents PV-10 at strip pricing, which is PV-10 adjusted for price sensitivities. Since GAAP does not prescribe a comparable GAAP measure for PV-10 of reserves adjusted for pricing sensitivities, it is not practicable for the Company to reconcile PV-10 at strip pricing to a standardized measure or any other GAAP measure.
Safe Harbor Statement
This release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements involve a wide variety of risks and uncertainties, and include, without limitation, statements with respect to the Company’s strategy and prospects. The forward-looking statements include statements about the expected benefits to the Company and its shareholders from the proposed acquisition of oil and gas properties (the “Lime Rock Acquisition”) from Lime Rock; the anticipated completion of the Lime Rock Acquisition or the timing thereof; the Company’s future reserves, production, financial position, business strategy, revenues, earnings, costs, capital expenditures and debt levels of the Company, and plans and objectives of management for future operations. Forward-looking statements are based on current expectations and subject to numerous assumptions and analyses made by Ring and its management considering their experience and perception of historical trends, current conditions and expected future developments, as well as other factors appropriate under the circumstances. However, whether actual results and developments will conform to expectations is subject to a number of material risks and uncertainties, including but not limited to: the Company’s ability to successfully integrate the oil and gas properties to be acquired in the Lime Rock Acquisition and achieve the anticipated benefits from them; risks relating to unforeseen liabilities of Ring or the assets acquired in the Lime Rock Acquisition; declines in oil, natural gas liquids or natural gas prices; the level of success in exploration, development and production activities; adverse weather conditions that may negatively impact development or production activities particularly in the winter; the timing of exploration and development expenditures; inaccuracies of reserve estimates or assumptions underlying them; revisions to reserve estimates as a result of changes in commodity prices; impacts to financial statements as a result of impairment write-downs; risks related to the level of indebtedness and periodic redeterminations of the borrowing base and interest rates under the Company’s credit facility; Ring’s ability to generate sufficient cash flows from operations to meet the internally funded portion of its capital expenditures budget; the impacts of hedging on results of operations; the effects of future regulatory or legislative actions; cost and availability of transportation and storage capacity as a result of oversupply, government regulation or other factors; and Ring’s ability to replace oil and natural gas reserves. Such statements are subject to certain risks and uncertainties which are disclosed in the Company’s reports filed with the Securities and Exchange Commission (“SEC”), including its Form 10-K for the fiscal year ended December 31, 2023, and its other SEC filings. Ring undertakes no obligation to revise or update publicly any forward-looking statements, except as required by law.
Contact Information
Al Petrie Advisors
Al Petrie, Senior Partner
Phone: 281-975-2146
Email: apetrie@ringenergy.com
1 Represents a non-GAAP financial measure that should not be considered a substitute for any GAAP measure. See section in this release titled “Non-GAAP Information” for a more detailed discussion.
2 Proved reserves determined by internal management estimates based on NYMEX strip pricing as of February 19, 2025.
FAQ
What is the value and structure of Ring Energy's (REI) latest acquisition?
How much production will REI gain from the Lime Rock acquisition?
When is the Lime Rock acquisition expected to close?
How many drilling locations does the Lime Rock acquisition add to REI's portfolio?
What is the expected 2025 Adjusted EBITDA from the acquired assets?
