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Ring Energy Announces Third Quarter 2024 Results, Provides Guidance For Fourth Quarter and Updates Full Year 2024 Outlook

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Ring Energy (REI) reported strong Q3 2024 results with record sales of 20,108 Boe/d (66% oil). The company achieved net income of $33.9 million ($0.17 per diluted share) and Adjusted EBITDA of $54.0 million. Notable developments include a $5.5 million divestiture of non-core vertical wells, $42.7 million in capital spending for drilling operations, and $15 million debt reduction during Q3. The company maintained positive cash flow for the 20th consecutive quarter and ended with $392.0 million in outstanding borrowings. Ring Energy updated its full-year 2024 guidance, projecting oil sales volumes between 13,250-13,450 Bo/d and capital spending of $147-155 million.

Ring Energy (REI) ha riportato risultati solidi per il terzo trimestre del 2024, con vendite record di 20.108 Boe/d (66% petrolio). L'azienda ha registrato un utile netto di 33,9 milioni di dollari (0,17 dollari per azione diluita) e un Adjusted EBITDA di 54,0 milioni di dollari. Tra gli sviluppi significativi c'è la dismissione di pozzetti verticali non core per 5,5 milioni di dollari, una spesa in conto capitale di 42,7 milioni di dollari per le operazioni di perforazione e una riduzione del debito di 15 milioni di dollari durante il terzo trimestre. L'azienda ha mantenuto un flusso di cassa positivo per il ventesimo trimestre consecutivo, chiudendo con 392,0 milioni di dollari in prestiti non rimborsati. Ring Energy ha aggiornato le previsioni per l'intero anno 2024, prevedendo volumi di vendita di petrolio tra 13.250 e 13.450 Bo/d e spese in conto capitale di 147-155 milioni di dollari.

Ring Energy (REI) reportó resultados sólidos en el tercer trimestre de 2024, con ventas récord de 20,108 Boe/d (66% petróleo). La compañía logró un ingreso neto de $33.9 millones ($0.17 por acción diluida) y un EBITDA ajustado de $54.0 millones. Entre los desarrollos notables se encuentran una desinversión de $5.5 millones de pozos verticales no centrales, $42.7 millones en gastos de capital para operaciones de perforación y una reducción de deuda de $15 millones durante el tercer trimestre. La compañía mantuvo un flujo de caja positivo por vigésimo trimestre consecutivo y terminó con $392.0 millones en préstamos pendientes. Ring Energy actualizó su guía para todo el año 2024, proyectando volúmenes de venta de petróleo entre 13,250 y 13,450 Bo/d y gastos de capital de $147-155 millones.

링 에너지 (REI)는 2024년 3분기 강력한 실적을 보고했으며, 기록적인 판매량인 20,108 Boe/d (66% 원유)를 기록했습니다. 회사는 순이익 3,390만 달러 ($0.17 주당 희석 기준)와 조정 EBITDA 5,400만 달러를 달성했습니다. 주목할 만한 발전으로는 비핵심 수직 우물의 550만 달러 매각, 시추 작업을 위한 자본 지출 4,270만 달러 및 3분기 동안 1,500만 달러의 채무 감소가 포함됩니다. 회사는 20분기 연속으로 긍정적인 현금 흐름을 유지했으며, 미지급 대출이 3억 9,200만 달러로 종료되었습니다. 링 에너지는 2024년 전체 연도 가이드를 업데이트하여 원유 판매량을 13,250~13,450 Bo/d, 자본 지출을 1억 4,700만~1억 5,500만 달러로 예상했습니다.

Ring Energy (REI) a rapporté de solides résultats pour le troisième trimestre 2024, avec des ventes record de 20 108 Boe/j (66 % pétrole). La société a réalisé un revenu net de 33,9 millions de dollars (0,17 dollar par action diluée) et un EBITDA ajusté de 54,0 millions de dollars. Parmi les développements notables, on note une cession de 5,5 millions de dollars d'un puits vertical non stratégique, une dépense en capital de 42,7 millions de dollars pour les opérations de forage et une réduction de la dette de 15 millions de dollars au cours du troisième trimestre. La société a maintenu un flux de trésorerie positif pour le vingtième trimestre consécutif et a terminé avec 392,0 millions de dollars d'emprunts en cours. Ring Energy a mis à jour ses prévisions pour l'ensemble de l'année 2024, projetant des volumes de ventes de pétrole compris entre 13 250 et 13 450 Bo/j et des dépenses en capital de 147 à 155 millions de dollars.

Ring Energy (REI) hat starke Ergebnisse für das dritte Quartal 2024 berichtet, mit Rekordverkäufen von 20.108 Boe/d (66% Öl). Das Unternehmen erzielte einen Nettoertrag von 33,9 Millionen Dollar (0,17 Dollar pro verwässerter Aktie) und ein bereinigtes EBITDA von 54,0 Millionen Dollar. Zu den bemerkenswerten Entwicklungen gehören ein Verkauf von nicht zum Kerngeschäft gehörenden vertikalen Brunnen für 5,5 Millionen Dollar, 42,7 Millionen Dollar an Investitionen für Bohrarbeiten und eine Schuldenreduzierung von 15 Millionen Dollar im dritten Quartal. Das Unternehmen hielt im zwanzigsten aufeinander folgenden Quartal einen positiven Cashflow und schloss mit 392,0 Millionen Dollar an ausstehenden Krediten ab. Ring Energy aktualisierte seine Prognose für das gesamte Jahr 2024 und erwartet Ölverkaufsvolumina zwischen 13.250 und 13.450 Bo/d sowie Investitionen von 147 bis 155 Millionen Dollar.

Positive
  • Record sales volumes of 20,108 Boe/d, exceeding guidance
  • Net income of $33.9 million ($0.17 per diluted share)
  • Successful divestiture of non-core assets for $5.5 million
  • Debt reduction of $15 million in Q3, $33 million YTD
  • Increased liquidity to record $208.0 million
Negative
  • 12% decrease in realized price per Boe from Q2 2024 ($48.24 vs $55.06)
  • 91% decline in Adjusted Free Cash Flow from Q2 ($1.9M vs $21.4M)
  • 43% decrease in Adjusted Net Income from Q2 ($13.4M vs $23.4M)
  • Natural gas takeaway constraints affecting pricing

Insights

Ring Energy delivered a strong Q3 2024 with record sales of 20,108 Boe/d and net income of $33.9 million ($0.17 per share). Key highlights include $54.0 million in Adjusted EBITDA and successful debt reduction of $15.0 million during the quarter. The strategic divestiture of non-core assets for $5.5 million demonstrates disciplined portfolio management. The company's liquidity reached a record $208.0 million while maintaining a healthy leverage ratio of 1.59x. Production growth of 15% year-over-year, combined with continued debt reduction, positions the company well for future growth despite potential commodity price volatility. The updated guidance reflecting recent divestitures and strong operational execution suggests continued focus on capital efficiency and free cash flow generation.

The operational metrics show excellent execution with LOE at $10.98 per Boe, near guidance midpoint, reflecting strong cost control. The successful drilling campaign of 13 wells and completion of 11 wells demonstrates efficient capital deployment. The shift in production mix to 66% oil maintains strong margins despite natural gas pricing challenges. The strategic focus on high-return horizontal wells in the Northwest Shelf and Central Basin Platform, combined with complementary vertical well development, indicates a balanced approach to resource development. The 2024 capital program of $147-155 million shows disciplined investment focused on maintaining production while generating free cash flow.

~ Q3 2024 Highlighted by Record Sales, Strategic Divestiture and Meaningful Debt Reduction ~

THE WOODLANDS, Texas, Nov. 06, 2024 (GLOBE NEWSWIRE) -- Ring Energy, Inc. (NYSE American: REI) (“Ring” or the “Company”) today reported operational and financial results for third quarter 2024 and provided an outlook for the fourth quarter and updated guidance for the full year.

Third Quarter 2024 Highlights

  • Produced record sales of 20,108 barrels of oil equivalent per day (“Boe/d”) (66% oil) exceeding the high end of guidance;
  • Oil sales were 13,204 Bo/d which were within guidance;
  • Reported net income of $33.9 million, or $0.17 per diluted share, and Adjusted Net Income1 of $13.4 million, or $0.07 per diluted share;
  • Incurred Lease Operating Expense (“LOE”) of $10.98 per Boe, near the midpoint of guidance;
  • Recorded Adjusted EBITDA1 of $54.0 million;
  • Divested non-core vertical wells and associated facilities in the Central Basin Platform for $5.5 million with a valuation of approximately 5.6 times estimated next twelve months cash flow2;
  • Guidance updated to reflect the impact of the divestiture;
  • Successful development campaign resulted in capital spending of $42.7 million (guidance was $35 million to $45 million) with 13 wells drilled and 11 wells completed and placed on production during the quarter;
  • Generated third quarter Adjusted Free Cash Flow1 of $1.9 million;
  • Remained cash flow positive for the 20th consecutive quarter;
  • Ended the period with $392.0 million in outstanding borrowings on the Company’s credit facility, reflecting a paydown of $15.0 million during the third quarter, $33.0 million YTD; and
  • Increased liquidity to a record $208.0 million and Leverage Ratio3 remained at 1.59x as of September 30, 2024.

Mr. Paul D. McKinney, Chairman of the Board and Chief Executive Officer, commented, “Our strong performance during the third quarter is a direct reflection of the Company’s commitment to its stockholders and — more specifically — the successful execution of our drilling and completion program and continued focus on reducing our all-in cash operating costs by our team of experienced professionals. Complementing this performance was the divestiture of non-core vertical assets in the Central Basin Platform (CBP).  When combined with the cash flow from operations, we were able to reduce debt by another $15 million during the period, reducing our debt to $392 million. We believe it is important to point out that our debt at the end of the third quarter was $5 million less than debt we had at the end of the quarter prior to closing the Founders acquisition last year, yet our production is higher by over 2,800 Boe/d, enhancing our ability to accelerate further debt reduction in the future.”

Mr. McKinney concluded, “As we look to the remainder of the fourth quarter and into 2025, we believe we are well positioned for continued success and further debt reduction as we remain squarely focused on our strategy of maximizing cash flow generation. As you know, further debt reduction over the coming quarters will be subject to commodity prices. If future oil prices are consistently lower than recent averages, we will pull back capital to maintain production in favor of our ongoing focus on debt reduction. Regarding our guidance, we have updated our full year 2024 guidance to reflect only the recent divestiture of non-core vertical assets. Our existing assets continue to meet or exceed expectations. Regarding our capital spending program during the fourth quarter, we look forward to the results of testing new opportunities designed to unlock new producing zones on our existing acreage. These investments represent a new phase of potential inventory growth for our Company through seeking to identify and develop new hydrocarbon resources organically. Although we are adding organic inventory growth as another strategy to create value, we will continue to pursue strategic, accretive and balance sheet enhancing acquisitions as our primary source of production and reserves growth. As in the past, we will maintain the discipline associated with enhancing our balance sheet and profitably achieving the size and scale designed to drive long-term value for our stockholders.  Thank you for your continued support.”

Summary Results

 QuarterYear to Date
 Q3 2024Q2 2024Q3 2024 to
Q2 2024 % Change
Q3 2023Q3 2024 to
Q3 2023 % Change
YTD 2024YTD 2023YTD % Change
Average Daily Sales Volumes (Boe/d)20,10819,7862%17,50915%19,64417,68811%
Crude Oil (Bo/d)13,20413,623(3)%12,02810%13,40612,18110%
Net Sales (MBoe)1,849.91,800.63%1,610.915%5,382.64,828.811%
Realized Price - All Products ($/Boe)$48.24$55.06(12)%$58.16(17)%$52.56$54.07(3)%
Realized Price - Crude Oil ($/Bo)$74.43$80.09(7)%$81.69(9)%$76.77$75.791%
Revenues ($MM)$89.2$99.1(10)%$93.7(5)%$282.9$261.18%
Net Income ($MM)$33.9$22.451%$(7.5)549%$61.8$54.015%
Adjusted Net Income1 ($MM)$13.4$23.4(43)%$26.3(49)%$57.2$79.3(28)%
Adjusted EBITDA1 ($MM)$54.0$66.4(19)%$58.6(8)%$182.4$170.67%
Capital Expenditures ($MM)$42.7$35.421%$42.41%$114.3$113.21%
Adjusted Free Cash Flow1 ($MM)$1.9$21.4(91)%$6.1(68)%$38.9$29.134%
         

Adjusted Net Income, Adjusted EBITDA, and Adjusted 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 Financial Information.”

Sales Volumes, Prices and Revenues: Sales volumes for the third quarter of 2024 were a record 20,108 Boe/d (66% oil, 15% natural gas and 19% NGLs), or 1,849,934 Boe. Positively impacting third quarter 2024 sales volumes was the Founders Acquisition that closed in August 2023 and incremental production brought online during the period associated with the Company’s ongoing development program. Second quarter 2024 sales volumes were 19,786 Boe/d (69% oil, 14% natural gas and 17% NGLs), or 1,800,570 Boe, and third quarter of 2023 sales volumes were 17,509 Boe/d (69% oil, 16% natural gas and 15% NGLs), or 1,610,857 Boe. Third quarter 2024 sales volumes were comprised of 1,214,788 barrels (“Bbls”) of oil, 1,705,027 thousand cubic feet (“Mcf”) of natural gas and 350,975 Bbls of NGLs.

For the third quarter of 2024, the Company realized an average sales price of $74.43 per barrel of crude oil, $(2.26) per Mcf of natural gas, and $7.66 per barrel of NGLs. The realized natural gas and NGL prices were impacted by a fee reduction to the value received. For the third quarter of 2024, the weighted average natural gas price per Mcf was $(0.50) and the weighted average fee per Mcf was $(1.76); the weighted average NGL price per barrel was $18.45 offset by a weighted average fee per barrel of $(10.79). The weighted average natural gas price for third quarter 2024 reflects continued natural gas product takeaway constraints, which could be alleviated through additional third-party pipeline capacity. The combined average realized sales price for the period was $48.24 per Boe versus $55.06 per Boe for the second quarter of 2024 and $58.16 per Boe in the third quarter of 2023. The average oil price differential the Company experienced from NYMEX WTI futures pricing in the third quarter of 2024 was a negative $0.56 per barrel of crude oil, while the average natural gas price differential from NYMEX futures pricing was a negative $4.43 per Mcf.

Revenues were $89.2 million for the third quarter of 2024 compared to $99.1 million for the second quarter of 2024 and $93.7 million for the third quarter of 2023. The decrease in third quarter 2024 revenues from the second quarter of 2024 was driven by a decrease in overall realized pricing, partially offset by increased sales volumes.

Lease Operating Expense (“LOE”): LOE, which includes expensed workovers and facilities maintenance, was $20.3 million, or $10.98 per Boe, in the third quarter of 2024, which was near the midpoint of the Company’s guidance of $10.50 to $11.25 per Boe. LOE was $19.3 million, or $10.72 per Boe in the second quarter of 2024 and $18.0 million, or $11.18 per Boe, for the third quarter of 2023. 

Gathering, Transportation and Processing (“GTP”) Costs: As previously disclosed, due to a contractual change effective May 1, 2022, the Company no longer maintains ownership and control of natural gas through processing for the majority of its gas produced. As a result, the majority of GTP costs are now reflected as a reduction to the natural gas sales price and not as an expense item. There does remain one contract in place with a natural gas processing entity where the point of control of gas dictates requiring the fees to be recorded as an expense.

Ad Valorem Taxes: Ad valorem taxes were $1.17 per Boe for the third quarter of 2024 compared to $0.74 per Boe in the second quarter of 2024 and $1.10 per Boe for the third quarter of 2023.

Production Taxes: Production taxes were $2.27 per Boe in the third quarter of 2024 compared to $2.01 per Boe in the second quarter of 2024 and $2.95 per Boe in third quarter of 2023. Production taxes ranged between 3.7% to 5.1% of revenue for all three periods.

Depreciation, Depletion and Amortization (“DD&A”) and Asset Retirement Obligation Accretion:  DD&A was $13.87 per Boe in the third quarter of 2024 versus $13.72 per Boe for the second quarter of 2024 and $13.65 per Boe in the third quarter of 2023. Asset retirement obligation accretion was $0.19 per Boe in the third quarter of 2024, compared to $0.20 for the second quarter of 2024 and $0.22 per Boe in the third quarter of 2023.

General and Administrative Expenses (“G&A”):  G&A was $6.4 million ($3.47 per Boe) for the third quarter of 2024 versus $7.7 million ($4.28 per Boe) for the second quarter of 2024 and $7.1 million ($4.40 per Boe) for the third quarter of 2023. G&A, excluding non-cash share-based compensation, was $6.4 million ($3.45 per Boe) for the third quarter of 2024 versus $5.6 million ($3.13 per Boe) for the second quarter of 2024 and $4.9 million ($3.05 per Boe) for the third quarter of 2023. G&A, excluding non-cash share-based compensation and transaction costs, was $6.4 million ($3.45 per Boe) for the third quarter of 2024 versus $5.6 million ($3.13 per Boe) for the second quarter of 2024 and $5.1 million ($3.15 per Boe) for the third quarter of 2023.

Interest Expense: Interest expense was $10.8 million in the third quarter of 2024 versus $10.9 million for the second quarter of 2024 and $11.4 million for the third quarter of 2023. 

Derivative (Loss) Gain:  In the third quarter of 2024, Ring recorded a net gain of $24.7 million on its commodity derivative contracts, including a realized $1.9 million cash commodity derivative loss and an unrealized $26.6 million non-cash commodity derivative gain. This compares to a net loss of $1.8 million in the second quarter of 2024, including a realized $2.6 million cash commodity derivative loss and an unrealized $0.8 million non-cash commodity derivative gain. In the third quarter of 2023, the Company recorded a net loss on commodity derivative contracts of $39.2 million, including a realized $5.4 million cash commodity derivative loss and an unrealized $33.9 million non-cash commodity derivative loss. 

A summary listing of the Company’s outstanding derivative positions at September 30, 2024 is included in the tables shown later in this release.

For the remainder (October through December) of 2024, the Company has approximately 0.6 million barrels of oil (approximately 48% of oil sales guidance midpoint) hedged and approximately 0.5 billion cubic feet of natural gas (approximately 32% of natural gas sales guidance midpoint) hedged.

Income Tax: The Company recorded a non-cash income tax provision of $10.1 million in the third quarter of 2024 versus a provision of  $6.8 million in the second quarter of 2024, and a benefit of $3.4 million for the third quarter of 2023.

Sale of Non-Core Properties: On September 30, 2024, the Company completed the sale of certain oil and gas properties, including vertical wells and associated facilities, within Andrews County, Texas and Gaines County, Texas to an unaffiliated party for $5.5 million. As part of the sale, the buyer assumed an asset retirement obligation balance of approximately $2.7 million.

Balance Sheet and Liquidity: Total liquidity (defined as cash and cash equivalents plus borrowing base availability under the Company’s credit facility) at September 30, 2024 was $208.0 million, a 7% increase from June 30, 2024. Liquidity at September 30, 2024 consisted of $208.0 million of availability under Ring’s revolving credit facility, which included a reduction of $35 thousand for letters of credit. On September 30, 2024, the Company had $392 million in borrowings outstanding on its credit facility that has a current borrowing base of $600 million. During the third quarter, Ring paid down $15 million in borrowings. Consistent with the past, the Company is targeting continued debt reduction, dependent on market conditions, the timing and level of capital spending, and other considerations.

Capital Expenditures: During the third quarter of 2024, capital expenditures were $42.7 million, which was within the Company’s guidance of $35 million to $45 million, and the number of wells drilled and completed (and placed on production) — 13 and 11 wells, respectively — was also within the Company’s guidance range. Three horizontal (“Hz”) wells were drilled and completed in the Northwest Shelf, including two 1-mile and one 1.5-mile. Four 1-mile Hz wells were drilled in the Central Basin Platform, two of which were completed in October. Finally, six vertical wells were drilled and completed in the Central Basin Platform.

Quarter Area Wells Drilled Wells Completed Drilled Uncompleted ("DUC")
         
1Q 2024 Northwest Shelf (Horizontal) 2 2 
  Central Basin Platform (Horizontal) 3 3 
  Central Basin Platform (Vertical) 6 6 
  Total (1) 11 11 
         
2Q 2024 Northwest Shelf (Horizontal)   
  Central Basin Platform (Horizontal) 5 5 
  Central Basin Platform (Vertical) 6 6 
  Total 11 11 
         
3Q 2024 Northwest Shelf (Horizontal) 3 3 
  Central Basin Platform (Horizontal) 4 2 2
  Central Basin Platform (Vertical) 6 6 
  Total 13 11 2

(1) First quarter total does not include the SWD well drilled and completed in the Central Basin Platform.

Full Year and Fourth Quarter 2024 Sales Volumes, Capital Investment and Operating Expense Guidance

The Company is updating its guidance to reflect actual results through the third quarter and the previously discussed divestiture of non-core assets that was completed on September 30, 2024.

Ring’s 2024 development program includes two rigs (one Hz and one vertical) focused on slightly growing oil sales volumes and maintaining year-over-year Boe sales. The Company’s YTD performance has led to greater year-over-year Boe and oil sales volumes growth than originally planned.

For full year 2024, Ring now expects total capital spending of $147 million to $155 million (versus $141 million to $161 million previously), with no change to the midpoint. The updated program includes a balanced and capital efficient combination of drilling, completing and placing on production 21 to 23 Hz and 22 to 24 vertical wells across the Company’s asset portfolio. Additionally, the full year capital spending program includes funds for targeted well recompletions, capital workovers, infrastructure upgrades, reactivations, and leasing costs, as well as non-operated drilling, completion, capital workovers, and ESG improvements.

All projects and estimates are based on assumed WTI oil prices of $70 to $90 per barrel and Henry Hub prices of $2.00 to $3.00 per Mcf. As in the past, Ring has designed its spending program with flexibility to respond to changes in commodity prices and other market conditions as appropriate.

Based on the $151 million midpoint of spending guidance, the Company continues to expect the following estimated allocation of capital, including:

  • 77% for drilling, completion, and related infrastructure;
  • 14% for recompletions and capital workovers;
  • 5% for ESG improvements (environmental and emission reducing upgrades); and
  • 4% for land, non-operated capital, and other.  

The Company is updating its full year 2024 oil sales volumes guidance to between 13,250 and 13,450 Bo/d versus 13,200 to 13,800 Bo/d previously, which reflects a 1% reduction at the midpoint due primarily to the divestiture of non-core assets discussed above.

The Company remains focused on maximizing Adjusted Free Cash Flow. All 2024 planned capital expenditures will be fully funded by cash on hand and cash from operations, and excess Adjusted Free Cash Flow is targeted for further debt reduction.   

For the fourth quarter of 2024, Ring is providing guidance for sales volumes of 12,950 to 13,550 Bo/d and 19,200 to 20,000 Boe/d (68% oil, 13% natural gas, and 19% NGLs). 

The Company is targeting total capital expenditures in fourth quarter 2024 of $33 million to $41 million, primarily for drilling and completion activity. Additionally, the capital spending program includes funds for targeted capital workovers, infrastructure upgrades, well reactivations, leasing acreage; and non-operated drilling, completion, and capital workovers.

Ring expects LOE of $10.75 to $11.25 per Boe for the fourth quarter and $10.70 to $11.00 per Boe for the full year. The Company’s previous guidance for full year 2024 was $10.50 to $11.25 per Boe.

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

  Q4FY
  20242024
Sales Volumes:   
Total Oil (Bo/d) 12,950 - 13,55013,250 - 13,450
Midpoint (Bo/d) 13,25013,350
Total (Boe/d) 19,200 - 20,00019,500 - 19,800
Midpoint (Boe/d) 19,60019,650
Oil (%) 68%68%
NGLs (%) 19%18%
Gas (%) 13%14%
    
Capital Program:   
Capital spending(1) (millions) $33 - $41$147 - $155
Midpoint (millions) $37$151
New Hz wells drilled 4 - 621 - 23
New Vertical wells drilled 4 - 622 - 24
Completion of DUC wells 2n/a
Wells completed and online 10 - 1443 - 47
    
Operating Expenses:   
LOE (per Boe) $10.75 - $11.25$10.70 - $11.00
Midpoint (per Boe) $11.00$10.85
    

(1) In addition to Company-directed drilling and completion activities, the capital spending outlook includes funds for targeted well recompletions, capital workovers, infrastructure upgrades, and well reactivations. Also included is anticipated spending for leasing acreage; and non-operated drilling, completion, capital workovers, and ESG improvements.

Conference Call Information

Ring will hold a conference call on Thursday, November 7, 2024 at 12:00 p.m. ET (11 a.m. CT) to discuss its third quarter 2024 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 2024 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.

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 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 assumptions and analyses made by Ring and its management in light of 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: 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 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

RING ENERGY, INC.
Condensed Statements of Operations
(Unaudited)

 Three Months Ended Nine Months Ended
 September 30, June 30, September 30, September 30, September 30,
  2024   2024   2023   2024   2023 
          
Oil, Natural Gas, and Natural Gas Liquids Revenues$  89,244,383  $    99,139,349  $  93,681,798  $282,886,868  $261,113,283 
          
Costs and Operating Expenses         
Lease operating expenses     20,315,282         19,309,017       18,015,348       57,984,733       51,426,145 
Gathering, transportation and processing costs          102,420              107,629              (4,530)           376,103              (6,985)
Ad valorem taxes       2,164,562           1,337,276         1,779,163         5,647,469         5,120,119 
Oil and natural gas production taxes       4,203,851           3,627,264         4,753,289       12,259,418       13,173,568 
Depreciation, depletion and amortization     25,662,123         24,699,421       21,989,034       74,153,994       64,053,637 
Asset retirement obligation accretion          354,195              352,184            354,175         1,057,213         1,073,900 
Operating lease expense          175,091              175,090            138,220            525,272            366,711 
General and administrative expense       6,421,567           7,713,534         7,083,574       21,604,323       21,023,956 
          
Total Costs and Operating Expenses     59,399,091         57,321,415       54,108,273     173,608,525     156,231,051 
          
Income from Operations     29,845,292         41,817,934       39,573,525     109,278,343     104,882,232 
          
Other Income (Expense)         
Interest income          143,704              144,933              80,426            367,181            160,171 
Interest (expense)   (10,754,243)      (10,946,127)    (11,381,754)    (33,199,314)    (32,322,840)
Gain (loss) on derivative contracts     24,731,625         (1,828,599)    (39,222,755)        3,888,531     (26,483,190)
Gain (loss) on disposal of assets                   —                51,338                     —              89,693          (132,109)
Other income                   —                       —                     —              25,686            126,210 
Net Other Income (Expense)     14,121,086       (12,578,455)    (50,524,083)    (28,828,223)    (58,651,758)
          
Income Before Benefit from (Provision for) Income Taxes     43,966,378         29,239,479     (10,950,558)      80,450,120       46,230,474 
          
Benefit from (Provision for) Income Taxes   (10,087,954)        (6,820,485)        3,411,336     (18,637,325)        7,737,688 
          
Net Income (Loss)$  33,878,424  $    22,418,994  $  (7,539,222) $  61,812,795  $  53,968,162 
          
Basic Earnings (Loss) per Share$             0.17  $               0.11  $           (0.04) $             0.31  $             0.29 
Diluted Earnings (Loss) per Share$             0.17  $               0.11  $           (0.04) $             0.31  $             0.28 
          
Basic Weighted-Average Shares Outstanding 198,177,046   197,976,721   195,361,476   197,850,538   188,865,752 
Diluted Weighted-Average Shares Outstanding 200,723,863   200,428,813   195,361,476   200,139,478   194,583,215 
                    

RING ENERGY, INC.
Condensed Operating Data
(Unaudited)

 Three Months Ended Nine Months Ended
 September 30, June 30, September 30, September 30, September 30,
  2024   2024   2023   2024   2023 
          
Net sales volumes:         
Oil (Bbls) 1,214,788   1,239,731   1,106,531   3,673,356   3,325,323 
Natural gas (Mcf) 1,705,027   1,538,347   1,567,104   4,739,881   4,726,056 
Natural gas liquids (Bbls) 350,975   304,448   243,142   919,225   715,832 
Total oil, natural gas and natural gas liquids (Boe)(1) 1,849,934   1,800,570   1,610,857   5,382,561   4,828,831 
          
% Oil 66%  69%  69%  68%  69%
% Natural Gas 15%  14%  16%  15%  16%
% Natural Gas Liquids 19%  17%  15%  17%  15%
          
Average daily sales volumes:         
Oil (Bbls/d) 13,204   13,623   12,028   13,406   12,181 
Natural gas (Mcf/d) 18,533   16,905   17,034   17,299   17,312 
Natural gas liquids (Bbls/d) 3,815   3,346   2,643   3,355   2,622 
Average daily equivalent sales (Boe/d) 20,108   19,786   17,509   19,644   17,688 
          
Average realized sales prices:         
Oil ($/Bbl)$74.43  $80.09  $81.69  $76.77  $75.79 
Natural gas ($/Mcf) (2.26)  (1.93)  0.36   (1.61)  0.11 
Natural gas liquids ($/Bbls) 7.66   9.27   11.22   9.29   11.97 
Barrel of oil equivalent ($/Boe)$48.24  $55.06  $58.16  $52.56  $54.07 
          
Average costs and expenses per Boe ($/Boe):         
Lease operating expenses$10.98  $10.72  $11.18  $10.77  $10.65 
Gathering, transportation and processing costs 0.06   0.06      0.07    
Ad valorem taxes 1.17   0.74   1.10   1.05   1.06 
Oil and natural gas production taxes 2.27   2.01   2.95   2.28   2.73 
Depreciation, depletion and amortization 13.87   13.72   13.65   13.78   13.26 
Asset retirement obligation accretion 0.19   0.20   0.22   0.20   0.22 
Operating lease expense 0.09   0.10   0.09   0.10   0.08 
General and administrative expense (including share-based compensation) 3.47   4.28   4.40   4.01   4.35 
G&A (excluding share-based compensation) 3.45   3.13   3.05   3.30   3.03 
G&A (excluding share-based compensation and transaction costs) 3.45   3.13   3.15   3.30   3.02 

(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, natural gas, and natural gas liquids may differ significantly.

RING ENERGY, INC.
Condensed Balance Sheets
(Unaudited)

  September 30, 2024 December 31, 2023
ASSETS    
Current Assets    
Cash and cash equivalents $                          —  $                 296,384 
Accounts receivable                36,394,451                 38,965,002 
Joint interest billing receivables, net                  1,343,801                   2,422,274 
Derivative assets                  8,375,984                   6,215,374 
Inventory                  4,627,980                   6,136,935 
Prepaid expenses and other assets                  2,076,896                   1,874,850 
Total Current Assets                52,819,112                 55,910,819 
Properties and Equipment    
Oil and natural gas properties, full cost method           1,770,078,718            1,663,548,249 
Financing lease asset subject to depreciation                  4,192,099                   3,896,316 
Fixed assets subject to depreciation                  3,389,907                   3,228,793 
Total Properties and Equipment           1,777,660,724            1,670,673,358 
Accumulated depreciation, depletion and amortization            (450,913,685)            (377,252,572)
Net Properties and Equipment           1,326,747,039            1,293,420,786 
Operating lease asset                  2,057,096                   2,499,592 
Derivative assets                  8,735,674                 11,634,714 
Deferred financing costs                  9,406,089                 13,030,481 
Total Assets $       1,399,765,010  $       1,376,496,392 
     
LIABILITIES AND STOCKHOLDERS’ EQUITY    
Current Liabilities    
Accounts payable $            90,143,131  $          104,064,124 
Income tax liability                     257,704                               — 
Financing lease liability                     879,598                      956,254 
Operating lease liability                     633,132                      568,176 
Derivative liabilities                  3,929,188                   7,520,336 
Notes payable                     912,819                      533,734 
Asset retirement obligations                     836,421                      165,642 
Total Current Liabilities                97,591,993               113,808,266 
     
Non-current Liabilities    
Deferred income taxes                26,859,453                   8,552,045 
Revolving line of credit              392,000,000               425,000,000 
Financing lease liability, less current portion                     496,954                      906,330 
Operating lease liability, less current portion                  1,574,117                   2,054,041 
Derivative liabilities                  4,535,777                 11,510,368 
Asset retirement obligations                25,396,573                 28,082,442 
Total Liabilities              548,454,867               589,913,492 
Commitments and contingencies    
Stockholders' Equity    
Preferred stock - $0.001 par value; 50,000,000 shares authorized; no shares issued or outstanding                              —                               — 
Common stock - $0.001 par value; 450,000,000 shares authorized; 198,196,034 shares and 196,837,001 shares issued and outstanding, respectively                     198,196                      196,837 
Additional paid-in capital              798,747,764               795,834,675 
Retained earnings (Accumulated deficit)                52,364,183                 (9,448,612)
Total Stockholders’ Equity              851,310,143               786,582,900 
Total Liabilities and Stockholders' Equity $       1,399,765,010  $       1,376,496,392 
         

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,
  2024   2024   2023   2024   2023 
Cash Flows From Operating Activities         
Net income (loss)$  33,878,424  $    22,418,994  $  (7,539,222) $  61,812,795  $  53,968,162 
Adjustments to reconcile net income (loss) to net cash provided by operating activities:         
Depreciation, depletion and amortization     25,662,123         24,699,421       21,989,034       74,153,994       64,053,637 
Asset retirement obligation accretion          354,195              352,184            354,175         1,057,213         1,073,900 
Amortization of deferred financing costs       1,226,881           1,221,608         1,258,466         3,670,096         3,699,235 
Share-based compensation            32,087           2,077,778         2,170,735         3,833,697         6,374,743 
Bad debt expense              8,817                14,937              19,656            187,594              41,865 
(Gain) loss on disposal of assets                   —              (89,693)                    —            (89,693)                    — 
Deferred income tax expense (benefit)     10,005,502           6,621,128       (3,585,002)      18,212,075       (8,160,712)
Excess tax expense (benefit) related to share-based compensation              7,553                46,972                7,886              95,333            158,763 
(Gain) loss on derivative contracts   (24,731,625)          1,828,599       39,222,755       (3,888,531)      26,483,190 
Cash received (paid) for derivative settlements, net     (1,882,765)        (2,594,497)      (5,350,798)      (5,938,777)      (5,829,728)
Changes in operating assets and liabilities:         
Accounts receivable       5,529,542           2,955,975     (14,419,854)        3,245,030       (5,671,516)
Inventory       1,148,418              189,121         1,778,460         1,508,955         3,701,882 
Prepaid expenses and other assets          545,529         (1,251,279)        1,028,203          (202,046)             68,525 
Accounts payable        (225,196)        (7,712,355)      18,562,202       (9,538,827)        3,500,913 
Settlement of asset retirement obligation        (222,553)           (160,963)         (105,721)         (974,877)      (1,025,607)
Net Cash Provided by Operating Activities     51,336,932         50,617,930      55,390,975     147,144,031     142,437,252 
          
Cash Flows From Investing Activities         
Payments for the Stronghold Acquisition                   —                       —                     —                     —     (18,511,170)
Payments for the Founders Acquisition                   —                       —     (49,902,757)                    —     (49,902,757)
Payments to purchase oil and natural gas properties        (164,481)           (147,004)         (726,519)         (787,343)      (1,605,262)
Payments to develop oil and natural gas properties   (42,099,874)      (36,554,719)    (40,444,810)  (117,559,401)  (112,996,032)
Payments to acquire or improve fixed assets subject to depreciation          (33,938)             (26,649)         (183,904)         (185,524)         (209,798)
Proceeds from sale of fixed assets subject to depreciation                   —                10,605                     —              10,605            332,230 
Proceeds from divestiture of equipment for oil and natural gas properties                   —                       —                     —                     —              54,558 
Proceeds from sale of Delaware properties                   —                       —          (384,225)                    —         7,608,692 
Proceeds from sale of New Mexico properties                   —            (144,398)        4,312,502          (144,398)        4,312,502 
Proceeds from sale of CBP vertical wells       5,500,000                       —                     —         5,500,000                     — 
Net Cash Used in Investing Activities   (36,798,293)      (36,862,165)    (87,329,713)  (113,166,061)  (170,917,037)
          
Cash Flows From Financing Activities         
Proceeds from revolving line of credit     27,000,000         29,500,000       94,500,000     108,000,000     179,000,000 
Payments on revolving line of credit   (42,000,000)      (44,500,000)    (63,500,000)  (141,000,000)  (166,000,000)
Proceeds from issuance of common stock from warrant exercises                   —                       —                     —                     —       12,301,596 
Payments for taxes withheld on vested restricted shares, net          (17,273)             (86,991)           (18,302)         (919,249)         (294,365)
Proceeds from notes payable                   —           1,501,507                     —         1,501,507         1,565,071 
Payments on notes payable        (442,976)           (145,712)         (462,606)      (1,122,422)      (1,114,883)
Payment of deferred financing costs                   —              (45,704)                    —            (45,704)                    — 
Reduction of financing lease liabilities        (257,202)           (176,128)         (191,748)         (688,486)         (551,579)
Net Cash Provided by (Used in) Financing Activities   (15,717,451)      (13,953,028)      30,327,344     (34,274,354)      24,905,840 
          
Net Increase (Decrease) in Cash     (1,178,812)           (197,263)      (1,611,394)         (296,384)      (3,573,945)
Cash at Beginning of Period       1,178,812           1,376,075         1,749,975            296,384         3,712,526 
Cash at End of Period$                —  $      1,178,812  $       138,581  $                —  $       138,581 
                    

RING ENERGY, INC.
Financial Commodity Derivative Positions
As of September 30, 2024

The following tables reflect the details of current derivative contracts as of September 30, 2024 (quantities are in barrels (Bbl) for the oil derivative contracts and in million British thermal units (MMBtu) for the natural gas derivative contracts):

 Oil Hedges (WTI)
 Q4 2024 Q1 2025 Q2 2025 Q3 2025 Q4 2025 Q1 2026 Q2 2026 Q3 2026
                
Swaps:               
Hedged volume (Bbl) 368,000     71,897     52,063  265,517     64,555  449,350  432,701            —
Weighted average swap price$   68.43 $   72.03 $   72.03 $   72.94 $   72.03 $   70.38 $   69.53 $        —
                
Deferred premium puts:               
Hedged volume (Bbl)    88,405            —            —            —            —            —            —            —
Weighted average strike price$   75.00 $        — $        — $        — $        — $        — $        — $        —
Weighted average deferred premium price$     2.61 $        — $        — $        — $        — $        — $        — $        —
                
Two-way collars:               
Hedged volume (Bbl) 128,800  474,750  464,100  225,400  404,800            —            —  379,685
Weighted average put price$   60.00 $   57.06 $   60.00 $   65.00 $   60.00 $        — $        — $   60.00
Weighted average call price$   73.24 $   75.82 $   69.85 $   78.91 $   75.68 $        — $        — $   72.50
                        


 Gas Hedges (Henry Hub)
 Q4 2024 Q1 2025 Q2 2025 Q3 2025 Q4 2025 Q1 2026 Q2 2026 Q3 2026
                
NYMEX Swaps:               
Hedged volume (MMBtu) 431,800  616,199  594,400  289,550            —            —  532,500            —
Weighted average swap price$     4.44 $     3.78 $     3.43 $     3.72 $        — $        — $     3.38 $        —
                
Two-way collars:               
Hedged volume (MMBtu)    18,300     33,401     27,300  308,200  598,000  553,500            —  515,728
Weighted average put price$     3.00 $     3.00 $     3.00 $     3.00 $     3.00 $     3.50 $        — $     3.00
Weighted average call price$     4.15 $     4.39 $     4.15 $     4.75 $     4.15 $     5.03 $        — $     3.93
                        


 Oil Hedges (basis differential)
 Q4 2024 Q1 2025 Q2 2025 Q3 2025 Q4 2025 Q1 2026 Q2 2026 Q3 2026
                
Argus basis swaps:               
Hedged volume (Bbl) 244,000  270,000  273,000  276,000  276,000            —            —            —
Weighted average spread price (1)$     1.15 $     1.00 $     1.00 $     1.00 $     1.00 $        — $        — $        —
                        

(1) The oil basis swap hedges are calculated as the fixed price (weighted average spread price above) less the difference between WTI Midland and WTI Cushing, in the issue of Argus Americas Crude.

RING ENERGY, INC.
Non-GAAP Financial Information

Certain financial information included in this release are not measures of financial performance recognized by accounting principles generally accepted in the United States (“GAAP”). These non-GAAP financial measures are “Adjusted Net Income,” “Adjusted EBITDA,” “Adjusted Free Cash Flow” or “AFCF,” “Adjusted Cash Flow from Operations” or “ACFFO,” “G&A Excluding Share-Based Compensation,” “G&A Excluding Share-Based Compensation and Transaction Costs,” “Leverage Ratio,” “All-In Cash Operating Costs,” and “Cash Operating Margin.” Management uses these non-GAAP financial measures in its analysis of performance. In addition, Adjusted EBITDA is a key metric used to determine a portion of 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” is calculated as net income (loss) minus the estimated after-tax impact of share-based compensation, ceiling test impairment, unrealized gains and losses on changes in the fair value of derivatives, and transaction costs for executed acquisitions and divestitures (A&D). 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 period to prior periods. The Company believes that the presentation of Adjusted Net Income provides useful information to investors as it is one of the metrics management uses to assess the Company’s ongoing operating and financial performance, and also is a useful metric for investors to compare our results with our peers.

 (Unaudited for All Periods)
 Three Months Ended Nine Months Ended
 September 30, June 30, September 30, September 30, September 30,
  2024   2024  2023   2024   2023 
 Total Per share - diluted Total Per share - diluted Total Per share - diluted Total Per share - diluted Total Per share - diluted
Net Income (Loss)$33,878,424  $0.17  $22,418,994  $0.11 $(7,539,222) $(0.04) $61,812,795  $0.31  $53,968,162  $0.28 
                    
Share-based compensation 32,087      2,077,778   0.01  2,170,735   0.01   3,833,697   0.02   6,374,743   0.03 
Unrealized loss (gain) on change in fair value of derivatives (26,614,390)  (0.13)  (765,898)    33,871,957   0.17   (9,827,308)  (0.05)  20,653,462   0.11 
Transaction costs - executed A&D            (157,641)     3,539      62,550    
Tax impact on adjusted items 6,132,537   0.03   (304,225)    (2,059,802)  (0.01)  1,380,335   0.01   (1,752,617)  (0.01)
                    
Adjusted Net Income$13,428,658  $0.07  $23,426,649  $0.12 $26,286,027  $0.13  $57,203,058  $0.29  $79,306,300  $0.41 
                    
Diluted Weighted-Average Shares Outstanding 200,723,863     200,428,813     195,361,476     200,139,478     194,583,215   
                    
Adjusted Net Income per Diluted Share$0.07    $0.12    $0.13    $0.29    $0.41   
                              

Reconciliation of Net Income (Loss) to Adjusted EBITDA

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.

 (Unaudited for All Periods)
 Three Months Ended Nine Months Ended
 September 30, June 30, September 30, September 30, September 30,
  2024   2024   2023   2024   2023 
Net Income (Loss)$33,878,424  $22,418,994  $(7,539,222) $61,812,795  $53,968,162 
          
Interest expense, net 10,610,539   10,801,194   11,301,328   32,832,133   32,162,669 
Unrealized loss (gain) on change in fair value of derivatives (26,614,390)  (765,898)  33,871,957   (9,827,308)  20,653,462 
Income tax (benefit) expense 10,087,954   6,820,485   (3,411,336)  18,637,325   (7,737,688)
Depreciation, depletion and amortization 25,662,123   24,699,421   21,989,034   74,153,994   64,053,637 
Asset retirement obligation accretion 354,195   352,184   354,175   1,057,213   1,073,900 
Transaction costs - executed A&D       (157,641)  3,539   62,550 
Share-based compensation 32,087   2,077,778   2,170,735   3,833,697   6,374,743 
Loss (gain) on disposal of assets    (51,338)     (89,693)  132,109 
Other income          (25,686)  (126,210)
          
Adjusted EBITDA$54,010,932  $66,352,820  $58,579,030  $182,388,009  $170,617,334 
          
Adjusted EBITDA Margin 61%  67%  63%  64%  65%
                    

Reconciliations of Net Cash Provided by Operating Activities to Adjusted Free Cash Flow and Adjusted EBITDA to Adjusted Free Cash Flow

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 Statements 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 the 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.

 (Unaudited for All Periods)
 Three Months Ended Nine Months Ended
 September 30, June 30, September 30, September 30, September 30,
  2024   2024   2023   2024   2023 
          
Net Cash Provided by Operating Activities$51,336,932  $    50,617,930  $55,390,975  $147,144,031  $142,437,252 
Adjustments - Condensed Statements of Cash Flows         
     Changes in operating assets and liabilities     (6,775,740)          5,979,501       (6,843,290)       5,961,765          (574,197)
     Transaction costs - executed A&D                  —                       —          (157,641)              3,539             62,550 
     Income tax expense (benefit) - current           74,899              152,385           165,780           329,917           264,261 
     Capital expenditures   (42,691,163)      (35,360,832)    (42,398,484)  (114,313,003)  (113,152,655)
Proceeds from divestiture of equipment for oil and natural gas properties                  —                       —                    —                    —             54,558 
     Bad debt expense            (8,817)             (14,937)           (19,656)         (187,594)           (41,865)
Loss (gain) on disposal of assets                  —                38,355                    —                    —           132,109 
Other income                  —                       —                    —            (25,686)         (126,210)
          
Adjusted Free Cash Flow$   1,936,111  $    21,412,402  $   6,137,684  $38,912,969  $29,055,803 
                    


 (Unaudited for All Periods)
 Three Months Ended Nine Months Ended
 September 30, June 30, September 30, September 30, September 30,
  2024   2024   2023   2024   2023 
          
Adjusted EBITDA$54,010,932  $    66,352,820  $58,579,030  $182,388,009  $170,617,334 
          
Net interest expense (excluding amortization of deferred financing costs)     (9,383,658)        (9,579,586)    (10,042,862)    (29,162,037)    (28,463,434)
Capital expenditures   (42,691,163)      (35,360,832)    (42,398,484)  (114,313,003)  (113,152,655)
Proceeds from divestiture of equipment for oil and natural gas properties                  —                       —                    —                    —             54,558 
          
Adjusted Free Cash Flow$   1,936,111  $    21,412,402  $   6,137,684  $38,912,969  $29,055,803 
                    

Reconciliation of Net Cash Provided by Operating Activities to Adjusted Cash Flow from Operations

The Company defines “Adjusted Cash Flow from Operations” or “ACFFO” as Net Cash Provided by Operating Activities, as reflected in our Condensed Statements of Cash Flows, less the changes in operating assets and liabilities, which includes accounts receivable, inventory, prepaid expenses and other assets, accounts payable, and settlement of asset retirement obligations, which are subject to variation due to the nature of the Company’s operations. Accordingly, the Company believes this non-GAAP measure is useful to investors because it is used often in its industry and allows investors to compare this metric to other companies in its peer group as well as the E&P sector.

 (Unaudited for All Periods)
 Three Months Ended Nine Months Ended
 September 30, June 30, September 30, September 30, September 30,
  2024   2024  2023   2024  2023 
          
Net Cash Provided by Operating Activities$51,336,932  $    50,617,930 $55,390,975  $147,144,031 $142,437,252 
          
Changes in operating assets and liabilities     (6,775,740)          5,979,501      (6,843,290)       5,961,765         (574,197)
          
Adjusted Cash Flow from Operations$44,561,192  $    56,597,431 $48,547,685  $153,105,796 $141,863,055 
                  

Reconciliation of General and Administrative Expense (G&A) to G&A Excluding Share-Based Compensation and Transaction Costs

The following table presents a reconciliation of General and Administrative Expense (G&A), a GAAP measure, to G&A excluding share-based compensation, and G&A excluding share-based compensation and transaction costs for executed acquisitions and divestitures (A&D).

 (Unaudited for All Periods)
 Three Months Ended Nine Months Ended
 September 30, June 30, September 30, September 30, September 30,
 2024 2024 2023 2024 2023
          
General and administrative expense (G&A)$   6,421,567 $      7,713,534 $   7,083,574  $21,604,323 $21,023,956
Shared-based compensation           32,087          2,077,778       2,170,735        3,833,697       6,374,743
G&A excluding share-based compensation      6,389,480          5,635,756       4,912,839      17,770,626     14,649,213
Transaction costs - executed A&D                  —                      —         (157,641)              3,539            62,550
G&A excluding share-based compensation and transaction costs$   6,389,480 $      5,635,756 $   5,070,480  $17,767,087 $14,586,663
                

Calculation of Leverage Ratio

“Leverage” or the “Leverage Ratio” is calculated under our existing senior revolving credit facility and means as of any date, the ratio of (i) our consolidated total debt as of such date to (ii) our Consolidated EBITDAX for the four consecutive fiscal quarters ending on or immediately prior to such date for which financial statements are required to have been delivered under our existing senior revolving credit facility.

The Company defines “Consolidated EBITDAX” in accordance with our existing senior revolving credit facility that means for any period an amount equal to the sum of (i) consolidated net income (loss) for such period plus (ii) to the extent deducted in determining consolidated net income for such period, and without duplication, (A) consolidated interest expense, (B) income tax expense determined on a consolidated basis in accordance with GAAP, (C) depreciation, depletion and amortization determined on a consolidated basis in accordance with GAAP, (D) exploration expenses determined on a consolidated basis in accordance with GAAP, and (E) all other non-cash charges acceptable to our senior revolving credit facility administrative agent determined on a consolidated basis in accordance with GAAP, in each case for such period minus (iii) all noncash income added to consolidated net income (loss) for such period; provided that, for purposes of calculating compliance with the financial covenants, to the extent that during such period we shall have consummated an acquisition permitted by the credit facility or any sale, transfer or other disposition of any property or assets permitted by the senior revolving credit facility, Consolidated EBITDAX will be calculated on a pro forma basis with respect to the property or assets so acquired or disposed of.

Also set forth in our existing senior revolving credit facility is the maximum permitted Leverage Ratio of 3.00. The following table shows the leverage ratio calculation for our most recent fiscal quarter.

 (Unaudited)
 Three Months Ended  
 December 31, March 31, June 30, September 30, Last Four Quarters
  2023   2024   2024   2024  
Consolidated EBITDAX Calculation:         
Net Income (Loss)$     50,896,479  $       5,515,377  $     22,418,994  $     33,878,424  $   112,709,274 
Plus: Consolidated interest expense        11,506,908          11,420,400          10,801,194          10,610,539          44,339,041 
Plus: Income tax provision (benefit)          7,862,930            1,728,886            6,820,485          10,087,954          26,500,255 
Plus: Depreciation, depletion and amortization        24,556,654          23,792,450          24,699,421          25,662,123          98,710,648 
Plus: non-cash charges acceptable to Administrative Agent       (29,695,076)         19,627,646            1,664,064         (26,228,108)        (34,631,474)
Consolidated EBITDAX$     65,127,895   $     62,084,759   $     66,404,158   $     54,010,932   $   247,627,744  
Plus: Pro Forma Acquired Consolidated EBITDAX                      —                        —                        —                        —                        — 
Less: Pro Forma Divested Consolidated EBITDAX               24,832              (124,084)             (469,376)             (600,460)          (1,169,088)
Pro Forma Consolidated EBITDAX$     65,152,727   $     61,960,675   $     65,934,782   $     53,410,472   $   246,458,656  
          
Non-cash charges acceptable to Administrative Agent         
Asset retirement obligation accretion$          351,786  $          350,834  $          352,184  $          354,195   
Unrealized loss (gain) on derivative assets       (32,505,544)         17,552,980              (765,898)        (26,614,390)  
Share-based compensation          2,458,682            1,723,832            2,077,778                 32,087   
Total non-cash charges acceptable to Administrative Agent$    (29,695,076) $     19,627,646  $       1,664,064  $    (26,228,108)  
          
 As of        
 September 30,        
  2024         
Leverage Ratio Covenant:         
Revolving line of credit$   392,000,000         
Pro Forma Consolidated EBITDAX      246,458,656         
Leverage Ratio                   1.59          
Maximum Allowed ≤ 3.00x         
            

All-In Cash Operating Costs

The Company defines All-In Cash Operating Costs, a non-GAAP financial measure, as “all in cash” costs which includes lease operating expenses, G&A costs excluding share-based compensation, net interest expense (including interest income and expense, excluding amortization of deferred financing costs), workovers and other operating expenses, production taxes, ad valorem taxes, and gathering/transportation costs. Management believes that this metric provides useful additional information to investors to assess the Company’s operating costs in comparison to its peers, which may vary from company to company.

 (Unaudited for All Periods)
 Three Months Ended Nine Months Ended
 September 30, June 30, September 30, September 30, September 30,
  2024  2024  2023   2024  2023 
All-In Cash Operating Costs:         
Lease operating expenses (including workovers)$20,315,282 $     19,309,017 $18,015,348  $57,984,733 $51,426,145 
G&A excluding share-based compensation      6,389,480           5,635,756       4,912,839      17,770,626     14,649,213 
Net interest expense (excluding amortization of deferred financing costs)      9,383,658           9,579,586     10,042,862      29,162,037     28,463,434 
Operating lease expense         175,091              175,090          138,220           525,272          366,711 
Oil and natural gas production taxes      4,203,851           3,627,264       4,753,289      12,259,418     13,173,568 
Ad valorem taxes      2,164,562           1,337,276       1,779,163        5,647,469       5,120,119 
Gathering, transportation and processing costs         102,420              107,629             (4,530)          376,103             (6,985)
All-in cash operating costs$42,734,344 $     39,771,618 $39,637,191  $123,725,658 $113,192,205 
          
Boe 1,849,934  1,800,570  1,610,857   5,382,561  4,828,831 
          
All-in cash operating costs per Boe$          23.10 $             22.09 $          24.61  $          22.99 $          23.44 
                 

Cash Operating Margin

The Company defines Cash Operating Margin, a non-GAAP financial measure, as realized revenues per Boe less “all-in cash operating costs per Boe. Management believes that this metric provides useful additional information to investors to assess the Company’s operating margins in comparison to its peers, which may vary from company to company.

 (Unaudited for All Periods)
 Three Months Ended Nine Months Ended
 September 30, June 30, September 30, September 30, September 30,
  2024  2024  2023  2024  2023
Cash Operating Margin         
Realized revenues per Boe$          48.24 $          55.06 $          58.16 $          52.56 $          54.07
All-in cash operating costs per Boe             23.10              22.09              24.61              22.99              23.44
Cash Operating Margin per Boe$          25.14 $          32.97 $          33.55 $          29.57 $          30.63

1 A non-GAAP financial measure; see the “Non-GAAP Information” section in this release for more information including reconciliations to the most comparable GAAP measures.

2 The cash flow for the next twelve months (“NTM”) represents field level cash flow based on a strip price as of September 12, 2024.

3 Refer to the “Non-GAAP Information” section in this release for calculation of the Leverage Ratio.

This press release was published by a CLEAR® Verified individual.


FAQ

What was Ring Energy's (REI) production volume in Q3 2024?

Ring Energy achieved record sales volumes of 20,108 barrels of oil equivalent per day (Boe/d) in Q3 2024, with 66% oil, 15% natural gas, and 19% NGLs.

How much debt did Ring Energy (REI) reduce in Q3 2024?

Ring Energy reduced its debt by $15 million during Q3 2024, bringing total year-to-date debt reduction to $33 million.

What was Ring Energy's (REI) net income for Q3 2024?

Ring Energy reported net income of $33.9 million, or $0.17 per diluted share, for Q3 2024.

What is Ring Energy's (REI) updated oil production guidance for 2024?

Ring Energy updated its full-year 2024 oil sales volumes guidance to between 13,250 and 13,450 barrels of oil per day.

Ring Energy Inc.

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Oil & Gas E&P
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