Ring Energy Announces Results for First Quarter of 2022
Ring Energy, Inc. reported strong first quarter 2022 results, with production volumes of 8,870 Boe/d, exceeding guidance. The company achieved a net income of $7.1 million ($0.06/share) and an adjusted net income of $22.3 million ($0.22/share), marking a 125% increase from Q4 2021. Adjusted EBITDA rose 48% to $35.6 million. Free cash flow increased by 36% to $12.6 million, contributing to a $10 million debt reduction. Ring maintains a robust liquidity of $71.4 million and reaffirms its 2022 outlook, targeting increased production and further debt reduction.
- Produced sales volumes of 8,870 Boe/d, above guidance.
- Adjusted EBITDA increased 48% to $35.6 million.
- Free cash flow rose 36% to $12.6 million.
- Paid down $10 million of debt, reducing leverage to 2.8x.
- Increased liquidity to $71.4 million, a 16% rise.
- Guidance for 2022 maintains sales growth expectations.
- Reported net income declined from $24.1 million in Q4 2021 to $7.1 million in Q1 2022.
- Incurred a $27.6 million loss on commodity derivatives.
~ Improved Hedge Position, Higher Pricing and Success of 2022 Drilling Program Drives Increased Free Cash Flow Generation and Further Pay Down of Debt ~
THE WOODLANDS, Texas, May 10, 2022 (GLOBE NEWSWIRE) -- Ring Energy, Inc. (NYSE American: REI) (“Ring” or the “Company”) today reported operational and financial results for the first quarter of 2022. In addition, the Company provided second quarter guidance and reiterated its full year 2022 outlook.
First Quarter 2022 and Recent Highlights
- Produced sales volumes of 8,870 barrels of oil equivalent per day (“Boe/d”) (
85% oil), which was above the high end of Ring’s guidance range of 8,500 to 8,700 Boe/d (85% oil); - Reported net income of
$7.1 million , or$0.06 per diluted share, compared with net income of$24.1 million , or$0.20 per diluted share, for the fourth quarter of 2021; - Posted Adjusted Net Income1 of
$22.3 million , or$0.22 per share, up more than125% from$9.9 million , or$0.10 per share, in the fourth quarter of 2021; - Grew Adjusted EBITDA1 by
48% to$35.6 million from$24.0 million for the fourth quarter of 2021; - Generated Cash Flow from Operations1 of
$32.3 million and Free Cash Flow1 of$12.6 million – an increase of57% and36% , respectively, from the fourth quarter of 2021; - Paid down
$10.0 million of debt on the Company’s revolving credit facility;
- Reduced debt to Adjusted trailing 12-month EBITDA (”Leverage”) ratio to 2.8x compared to 3.5x at year end 2021; Leverage ratio was less than 2.0x using annualized first quarter 2022 Adjusted EBITDA;
- Increased liquidity to
$71.4 million – a16% increase from year end 2021;
- Drilled six wells (including four in the Central Basin Platform (“CBP”) and two in the Northwest Shelf (“NWS”) in the first quarter and placed on production the four CBP wells;
- Converted four NWS wells from downhole electrical submersible pumps to rod pumps (“CTRs”), thereby reducing costly workovers and long-term operating costs; and
- Provided guidance for the second quarter and reaffirmed the Company’s full year outlook of 2022.
_______________
1 A non-GAAP financial measure; see “Non-GAAP Information” section in this release for more information including reconciliations to the most comparable GAAP measures.
Mr. Paul D. McKinney, Chairman of the Board and Chief Executive Officer, commented, “We were pleased with our overall operating and financial results for the first quarter, which establishes a solid foundation for 2022 and is another clear representation of the merits of our value-focused, proven strategy. Our first quarter sales volumes came in above the high end of our guidance and benefited from placing wells on production sooner than anticipated and the installation of certain field compressors that positively benefited natural gas sales volumes. During the first quarter, we further benefitted from the increased commodity price environment as the majority of our lower priced oil hedges expired at the end of last year and we have no natural gas hedges in place for 2022. Complemented by our continued pursuit of driving further cost efficiencies throughout the business, we generated almost
Mr. McKinney continued, “We have been encouraged with the results from our one-rig continuous drilling program that was initiated in late January. As in the past, our efforts are focused on our highest risk-adjusted rate of return projects that will allow us to profitably grow our production and reserve levels while maximizing cash flow generation. Complementing our targeted 2022 drilling and completion campaign, during the first quarter we performed four CTRs – all in the NWS – as part of our successful program to reduce costly workovers and long-term operating costs.”
Mr. McKinney concluded, “The first quarter of 2022 marked the beginning of a new chapter for Ring as we moved from a phased drilling program in 2021 that resulted in some unevenness in quarterly production last year, to a continuous drilling program in 2022. We expect this transition will result in meaningful growth in year-over-year production and cash flow generation. I appreciate all of the hard work and dedication of our workforce in executing our development and operational programs, and driving additional efficiencies that directly benefit our financial performance. I also want to thank our investors for their continued support of our efforts and progress building shareholder value.”
Financial Overview: For the first quarter of 2022, the Company reported net income of
Adjusted EBITDA grew by
Free Cash Flow was
Adjusted Net Income, Adjusted EBITDA, Cash Flow from Operations, 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 first quarter of 2022 were 8,870 Boe/d (
For the first quarter of 2022, the Company realized an average sales price of
Revenues were
Lease Operating Expense (“LOE”): LOE, which includes expensed workovers and facilities maintenance, was
Gathering, Transportation and Processing (“GTP”) Costs: GTP costs, which are associated with natural gas sales, were
Ad Valorem Taxes: Ad valorem taxes were
Production Taxes: Production taxes were
Depreciation, Depletion and Amortization (“DD&A”) and Asset Retirement Obligation Accretion: DD&A was
Operating Lease Expense: Operating lease expense was
General and Administrative Expenses (“G&A”): G&A, excluding share-based compensation, was
Interest Expense: Interest expense was
Derivative (Loss) Gain: In the first quarter of 2022, Ring recorded a loss of
On January 1, 2022, nearly
| Average | Weighted Avg. | |||
| Date Entered Into | Production Period | Instrument | Daily Volumes | Swap Price |
| Crude Oil - WTI | (Bbls) | (per Bbl) | ||
| 02/01/2022 | Balance of calendar year 2022 | Swaps | 1,000 | |
(1) As of March 31, 2022.
A full listing of the Company’s current outstanding crude oil derivative positions is included in the tables shown later in this release.
Income Tax: The Company recorded a non-cash income tax provision of
Balance Sheet and Liquidity: Total liquidity at the end of the first quarter of 2022 was
In the fourth quarter of 2021, Ring successfully reaffirmed the Company’s borrowing base under its revolving credit facility at
Capital Expenditures: During the first quarter of 2022, capital expenditures on an accrual basis were
2022 Capital Investment, Sales Volumes, and Operating Expense Guidance
In response to a continued strong crude oil and natural gas price environment and following the success of its 2021 drilling program, in late January Ring commenced a 2022 continuous one-rig drilling program that is focused on the Company’s highest rate-of-return inventory in its NWS and CBP acreage positions.
For full year 2022, Ring reiterates its outlook of total capital spending in the range of
82% for drilling, completion, and related equipment and facilities;12% for CTRs, recompletions and capital workovers; and6% for land, non-operated capital and other investments.
The Company remains focused on generating free cash flow in 2022, after all expenses, costs and capital expenditures. The increased level of capital investment in 2022 is expected to generate almost
Supported by its targeted development program and continued focus on operational excellence, the Company continues to forecast full year 2022 sales volumes of 9,000 to 9,600 Boe/d (
The guidance in the table below represents the Company's current good faith estimate of the range of likely future results for the full year and second quarter of 2022. Guidance could be affected by the factors discussed below in the "Safe Harbor Statement" section.
| Full Year | Q2 | |
| 2022 | 2022 | |
| Sales Volumes: | ||
| Total (Boe/d) | 9,000 - 9,600 | 9,000 - 9,400 |
| Oil (Bo/d) | 7,800 - 8,350 | 7,700 - 8,100 |
| Capital Program: | ||
| Capital spending(1) (millions) | ||
| Number of new wells drilled | 25 - 33 | 8 - 10 |
| Number of new wells completed and online | 25 - 30 | 7 - 9 |
| Operating Expenses: | ||
| LOE (per Boe) | ||
| GTP (per Boe) | ||
(1) 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 NWS and CBP 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, May 11, 2022 at 11:00 a.m. ET to discuss its first quarter 2022 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 First Quarter 2022 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, 2021, and its other filings with the SEC. Readers and investors are cautioned that the Company’s actual results may differ materially from those described in the forward-looking statements due to a number of factors, including, but not limited to, the Company’s ability to acquire productive oil and/or gas properties or to successfully drill and complete oil and/or gas wells on such properties, general economic conditions both domestically and abroad, and the conduct of business by the Company, and other factors that may be more fully described in additional documents set forth by the Company.
Contact Information
Al Petrie Advisors
Al Petrie, Senior Partner
Phone: 281-975-2146
Email: apetrie@ringenergy.com
| RING ENERGY, INC. | ||||||||||||
| Condensed Statements of Operations | ||||||||||||
| (Unaudited) | ||||||||||||
| Three Months Ended | ||||||||||||
| March 31, | December 31, | March 31, | ||||||||||
| 2022 | 2021 | 2021 | ||||||||||
| Oil and Natural Gas Revenues | $ | 68,181,032 | $ | 59,667,156 | $ | 39,502,532 | ||||||
| Costs and Operating Expenses | ||||||||||||
| Lease operating expenses | 8,953,165 | 7,678,140 | 8,226,575 | |||||||||
| Gathering, transportation and processing costs | 1,296,858 | 1,449,884 | 935,019 | |||||||||
| Ad valorem taxes | 951,954 | 131,663 | 737,251 | |||||||||
| Oil and natural gas production taxes | 3,218,362 | 2,831,560 | 1,852,762 | |||||||||
| Depreciation, depletion and amortization | 9,781,287 | 10,474,159 | 8,108,158 | |||||||||
| Asset retirement obligation accretion | 188,242 | 183,383 | 193,744 | |||||||||
| Operating lease expense | 83,590 | 83,591 | 271,517 | |||||||||
| General and administrative expense (including share-based compensation) | 5,522,277 | 4,964,711 | 2,912,991 | |||||||||
| Total Costs and Operating Expenses | 29,995,735 | 27,797,091 | 23,238,017 | |||||||||
| Income from Operations | 38,185,297 | 31,870,065 | 16,264,515 | |||||||||
| Other Income (Expense) | ||||||||||||
| Interest expense | (3,398,361 | ) | (3,542,514 | ) | (3,741,969 | ) | ||||||
| Loss on derivative contracts | (27,596,141 | ) | (4,266,942 | ) | (31,588,639 | ) | ||||||
| Net Other Expense | (30,994,502 | ) | (7,809,456 | ) | (35,330,608 | ) | ||||||
| Income (Loss) Before Provision for Income Taxes | 7,190,795 | 24,060,609 | (19,066,093 | ) | ||||||||
| (Provision For) Benefit From Income Taxes | (78,752 | ) | 51,601 | - | ||||||||
| Net Income (Loss) | $ | 7,112,043 | $ | 24,112,210 | $ | (19,066,093 | ) | |||||
| Basic Earnings (Loss) per Share | $ | 0.07 | $ | 0.24 | $ | (0.19 | ) | |||||
| Diluted Earnings (Loss) per Share | $ | 0.06 | $ | 0.20 | $ | (0.19 | ) | |||||
| Basic Weighted-Average Shares Outstanding | 100,192,562 | 99,789,095 | 99,092,715 | |||||||||
| Diluted Weighted-Average Shares Outstanding | 124,004,178 | 123,297,240 | 99,092,715 | |||||||||
| RING ENERGY, INC. | ||||||||||||
| Condensed Operating Data | ||||||||||||
| (Unaudited) | ||||||||||||
| Three Months Ended | ||||||||||||
| March 31, | December 31, | March 31, | ||||||||||
| 2022 | 2021 | 2021 | ||||||||||
| Net sales volumes: | ||||||||||||
| Oil (Bbls) | 676,215 | 715,163 | 610,121 | |||||||||
| Natural gas (Mcf) | 732,283 | 761,682 | 637,808 | |||||||||
| Total oil and natural gas (Boe) (1) | 798,262 | 842,110 | 716,422 | |||||||||
| % Oil | 85 | % | 85 | % | 85 | % | ||||||
| Average daily equivalent sales (Boe/d) | 8,870 | 9,153 | 7,960 | |||||||||
| Average realized sales prices: | ||||||||||||
| Oil ($/Bbl) | $ | 93.80 | $ | 76.35 | $ | 58.00 | ||||||
| Natural gas ($/Mcf) | 6.49 | 6.65 | 6.46 | |||||||||
| Barrel of oil equivalent ($/Boe) | $ | 85.41 | $ | 70.85 | $ | 55.14 | ||||||
| Average costs and expenses per Boe ($/Boe): | ||||||||||||
| Lease operating expenses | $ | 11.22 | $ | 9.12 | $ | 11.48 | ||||||
| Gathering, transportation and processing costs | 1.62 | 1.72 | 1.31 | |||||||||
| Ad valorem taxes | 1.19 | 0.16 | 1.03 | |||||||||
| Oil and natural gas production taxes | 4.03 | 3.36 | 2.59 | |||||||||
| Depreciation, depletion and amortization | 12.25 | 12.44 | 11.32 | |||||||||
| Asset retirement obligation accretion | 0.24 | 0.22 | 0.27 | |||||||||
| Operating lease expense | 0.10 | 0.10 | 0.38 | |||||||||
| General and administrative expense (including share-based compensation) | 6.92 | 5.90 | 4.07 | |||||||||
| General and administrative expense (excluding share-based compensation) | 5.01 | 4.79 | 3.57 | |||||||||
(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. | ||||||||
| Balance Sheets | ||||||||
| (Unaudited) | ||||||||
| March 31, | December 31, | |||||||
| 2022 | 2021 | |||||||
| ASSETS | ||||||||
| Current Assets | ||||||||
| Cash and cash equivalents | $ | 2,139,211 | $ | 2,408,316 | ||||
| Accounts receivable | 35,249,566 | 24,026,807 | ||||||
| Joint interest billing receivable | 1,285,459 | 2,433,811 | ||||||
| Prepaid expenses and other assets | 735,144 | 938,029 | ||||||
| Total Current Assets | 39,409,380 | 29,806,963 | ||||||
| Properties and Equipment | ||||||||
| Oil and natural gas properties subject to amortization | 903,632,896 | 883,844,745 | ||||||
| Financing lease asset subject to depreciation | 1,422,487 | 1,422,487 | ||||||
| Fixed assets subject to depreciation | 2,089,163 | 2,089,722 | ||||||
| Total Properties and Equipment | 907,144,546 | 887,356,954 | ||||||
| Accumulated depreciation, depletion and amortization | (245,223,053 | ) | (235,997,307 | ) | ||||
| Net Properties and Equipment | 661,921,493 | 651,359,647 | ||||||
| Operating lease asset | 1,209,473 | 1,277,253 | ||||||
| Deferred financing costs | 1,514,192 | 1,713,466 | ||||||
| TOTAL ASSETS | $ | 704,054,538 | $ | 684,157,329 | ||||
| LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||||
| Current Liabilities | ||||||||
| Accounts payable | $ | 54,262,245 | $ | 46,233,452 | ||||
| Income tax liability | 12,813 | - | ||||||
| Financing lease liability | 247,848 | 316,514 | ||||||
| Operating lease liability | 296,023 | 290,766 | ||||||
| Derivative liabilities | 42,722,228 | 29,241,588 | ||||||
| Notes payable | 219,029 | 586,410 | ||||||
| Total Current Liabilities | 97,760,186 | 76,668,730 | ||||||
| Non-Current Liabilities | ||||||||
| Deferred income taxes | 156,231 | 90,292 | ||||||
| Revolving line of credit | 280,000,000 | 290,000,000 | ||||||
| Financing lease liability, less current portion | 293,615 | 343,727 | ||||||
| Operating lease liability, less current portion | 1,061,591 | 1,138,319 | ||||||
| Asset retirement obligations | 15,524,755 | 15,292,054 | ||||||
| Total Non-Current Liabilities | 297,036,192 | 306,864,392 | ||||||
| Total Liabilities | 394,796,378 | 383,533,122 | ||||||
| Stockholders' Equity | ||||||||
| Preferred stock - | - | - | ||||||
| Common stock - | 100,193 | 100,193 | ||||||
| Additional paid-in capital | 554,994,202 | 553,472,292 | ||||||
| Accumulated deficit | (245,836,235 | ) | (252,948,278 | ) | ||||
| Total Stockholders' Equity | 309,258,160 | 300,624,207 | ||||||
| TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | $ | 704,054,538 | $ | 684,157,329 | ||||
| RING ENERGY, INC. | ||||||||||||
| Statements of Cash Flows | ||||||||||||
| (Unaudited) | ||||||||||||
| Three Months Ended | ||||||||||||
| March 31, | December 31, | March 31, | ||||||||||
| 2022 | 2021 | 2021 | ||||||||||
| Cash Flows From Operating Activities | ||||||||||||
| Net income (loss) | $ | 7,112,043 | $ | 24,112,210 | $ | (19,066,093 | ) | |||||
| Adjustments to reconcile net income (loss) to net cash provided by operating activities: | ||||||||||||
| Depreciation, depletion and amortization | 9,781,287 | 10,474,159 | 8,108,158 | |||||||||
| Asset retirement obligation accretion | 188,242 | 183,383 | 193,744 | |||||||||
| Amortization of deferred financing costs | 199,274 | 169,349 | 183,027 | |||||||||
| Share-based compensation | 1,521,910 | 933,593 | 355,494 | |||||||||
| Deferred income tax (benefit) expense | 65,939 | 123,536 | (1,792,142 | ) | ||||||||
| Excess tax (benefit) expense related to share-based compensation | - | (175,187 | ) | 1,792,142 | ||||||||
| Loss on derivative contracts | 27,596,141 | 4,266,942 | 31,588,639 | |||||||||
| Cash paid for derivative settlements, net | (14,115,501 | ) | (19,490,022 | ) | (5,920,791 | ) | ||||||
| Changes in assets and liabilities: | ||||||||||||
| Accounts receivable | (10,078,098 | ) | (4,466,561 | ) | (5,968,739 | ) | ||||||
| Prepaid expenses and retainers | 202,885 | 360,772 | 165,200 | |||||||||
| Accounts payable | 2,519,011 | 7,119,652 | 6,293,506 | |||||||||
| Settlement of asset retirement obligation | (553,368 | ) | (404,053 | ) | (244,461 | ) | ||||||
| Net Cash Provided by Operating Activities | 24,439,765 | 23,207,773 | 15,687,684 | |||||||||
| Cash Flows From Investing Activities | ||||||||||||
| Payments to purchase oil and natural gas properties | (360,848 | ) | (789,281 | ) | (258,970 | ) | ||||||
| Payments to develop oil and natural gas properties | (13,860,249 | ) | (16,621,196 | ) | (11,898,939 | ) | ||||||
| Purchase of fixed assets subject to depreciation | (10,114 | ) | 40,801 | (19,461 | ) | |||||||
| Sale of fixed assets subject to depreciation | 8,500 | - | - | |||||||||
| Proceeds from divestiture of oil and natural gas properties | - | - | 2,000,000 | |||||||||
| Net Cash Used in Investing Activities | (14,222,711 | ) | (17,369,676 | ) | (10,177,370 | ) | ||||||
| Cash Flows From Financing Activities | ||||||||||||
| Proceeds from revolving line of credit | 10,000,000 | 25,750,000 | 13,000,000 | |||||||||
| Payments on revolving line of credit | (20,000,000 | ) | (30,750,000 | ) | (20,500,000 | ) | ||||||
| Proceeds form issuance of common stock and warrants | - | 126,240 | 161,269 | |||||||||
| Proceeds from option exercise | - | 200,000 | - | |||||||||
| Payments for taxes withheld on vested restricted shares | - | (385,330 | ) | - | ||||||||
| Proceeds from notes payable | - | 64,580 | - | |||||||||
| Payments on notes payable | (367,381 | ) | (335,321 | ) | - | |||||||
| Payment of deferred financing costs | - | (27,931 | ) | - | ||||||||
| Reduction of financing lease liabilities | (118,778 | ) | (118,965 | ) | (49,707 | ) | ||||||
| Net Cash Used in Investing Activities | (10,486,159 | ) | (5,476,727 | ) | (7,388,438 | ) | ||||||
| Net (Decrease) Increase in Cash | (269,105 | ) | 361,370 | (1,878,124 | ) | |||||||
| Cash at Beginning of Period | 2,408,316 | 2,046,946 | 3,578,634 | |||||||||
| Cash at End of Period | $ | 2,139,211 | $ | 2,408,316 | $ | 1,700,510 | ||||||
| RING ENERGY, INC. | |||||
| Financial Commodity Derivative Positions | |||||
| As of May 10, 2022 | |||||
| Average | Weighted Avg. | ||||
| Date Entered Into | Production Period | Instrument | Daily Volumes | Swap Price | |
| Crude Oil - WTI | (Bbls) | (per Bbl) | |||
| 12/04/2020 | Calendar year 2022 | Swaps | 500 | ||
| 12/07/2020 | Calendar year 2022 | Swaps | 500 | ||
| 12/10/2020 | Calendar year 2022 | Swaps | 500 | ||
| 12/17/2020 | Calendar year 2022 | Swaps | 250 | ||
| 01/04/2021 | Calendar year 2022 | Swaps | 250 | ||
| 02/04/2021 | Calendar year 2022 | Swaps | 250 | ||
| 05/11/2021 | Calendar year 2022 | Swaps | 879(1) | ||
| 02/01/2022 | Balance of calendar year 2022 | Swaps | 1,000 | ||
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 Income (Loss) 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 | ||||||||||||
| March 31, | December 31, | March 31, | ||||||||||
| 2022 | 2021 | 2021 | ||||||||||
| (Unaudited for All Periods) | ||||||||||||
| Net Income (Loss) | $ | 7,112,043 | $ | 24,112,210 | $ | (19,066,093 | ) | |||||
| Share-based compensation | 1,521,910 | 933,593 | 355,494 | |||||||||
| Unrealized loss (gain) on change in fair value of derivatives | 13,480,640 | (15,223,080 | ) | 25,667,848 | ||||||||
| Tax impact of adjusted items | 164,305 | 30,646 | - | |||||||||
| Adjusted Net Income | $ | 22,278,898 | $ | 9,853,369 | $ | 6,957,249 | ||||||
| Weighted-Average Shares Outstanding | 100,192,562 | 99,789,095 | 99,092,715 | |||||||||
| Adjusted Net Income per Share | $ | 0.22 | $ | 0.10 | $ | 0.07 | ||||||
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 income (loss) plus net interest 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 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), capital expenditures and proceeds from divestiture of oil and natural gas properties. 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 income (loss), 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 | ||||||||||||
| March 31, | December 31, | March 31, | ||||||||||
| 2022 | 2021 | 2021 | ||||||||||
| (Unaudited for All Periods) | ||||||||||||
| Net Income (Loss) | $ | 7,112,043 | $ | 24,112,210 | $ | (19,066,093 | ) | |||||
| Interest expense, net | 3,398,361 | 3,542,514 | 3,741,969 | |||||||||
| Unrealized loss (gain) on change in fair value of derivatives | 13,480,640 | (15,223,080 | ) | 25,667,848 | ||||||||
| Income tax provision (benefit) | 78,752 | (51,601 | ) | - | ||||||||
| Depreciation, depletion and amortization | 9,781,287 | 10,474,159 | 8,108,158 | |||||||||
| Asset retirement obligation accretion | 188,242 | 183,383 | 193,744 | |||||||||
| Share-based compensation | 1,521,910 | 933,593 | 355,494 | |||||||||
| Adjusted EBITDA | $ | 35,561,235 | $ | 23,971,178 | $ | 19,001,120 | ||||||
| Adjusted EBITDA Margin | 52 | % | 40 | % | 48 | % | ||||||
| Weighted-Average Shares Outstanding | 100,192,562 | 99,789,095 | 99,092,715 | |||||||||
| Adjusted EBITDA per Share | $ | 0.35 | $ | 0.24 | $ | 0.19 | ||||||
| Three Months Ended | ||||||||||||
| March 31, | December 31, | March 31, | ||||||||||
| 2022 | 2021 | 2021 | ||||||||||
| (Unaudited for All Periods) | ||||||||||||
| Adjusted EBITDA | $ | 35,561,235 | $ | 23,971,178 | $ | 19,001,120 | ||||||
| Net interest expense (excluding amortization of deferred financing costs) | (3,199,087 | ) | (3,373,165 | ) | (3,558,942 | ) | ||||||
| Capital expenditures | (19,743,693 | ) | (11,292,707 | ) | (14,525,436 | ) | ||||||
| Proceeds from divestiture of oil and natural gas properties | - | - | 2,000,000 | |||||||||
| Free Cash Flow | $ | 12,618,455 | $ | 9,305,306 | $ | 2,916,742 | ||||||
| Three Months Ended | ||||||||||||
| March 31, | December 31, | March 31, | ||||||||||
| 2022 | 2021 | 2021 | ||||||||||
| (Unaudited for All Periods) | ||||||||||||
| Net Cash Provided by Operating Activities | $ | 24,439,765 | $ | 23,207,773 | $ | 15,687,684 | ||||||
| Changes in operating assets and liabilities | 7,909,570 | (2,609,810 | ) | (245,506 | ) | |||||||
| Cash Flow from Operations | $ | 32,349,335 | $ | 20,597,963 | $ | 15,442,178 | ||||||
FAQ
What were Ring Energy's production volumes for Q1 2022?
What was Ring Energy's net income for Q1 2022?
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