Group 1 - Ring Energy (REI) reported solid Q1 2025 results but is expected to generate minimal free cash flow for the remainder of 2025 at current strip prices with its original development plans [2] - The company has significantly reduced its capital expenditure (capex) budget in response to the anticipated cash flow challenges [2] Group 2 - The article highlights the expertise of Aaron Chow, also known as Elephant Analytics, who has over 15 years of analytical experience and is a top-rated analyst on TipRanks [2] - Aaron Chow co-founded a mobile gaming company that was acquired by PENN Entertainment and has a strong background in designing economic models for mobile apps [2]

Financial Performance - Ring Energy reported average daily sales volumes of 18,392 Boe/d, exceeding the midpoint of guidance, with 12,074 Bo/d of crude oil sold[4] - The company achieved a net income of $9.1 million, representing a 60% increase from Q4 2024, and an Adjusted EBITDA of $46.4 million[4] - Average realized price for crude oil was $70.40 per barrel, a 2% increase from Q4 2024, while total revenues decreased by 5% to $79.1 million[4] - Net income for Q1 2025 was $9,110,738, compared to $5,657,519 in Q4 2024, representing a 61% increase[30] - For Q1 2025, the company reported a net income of $9,110,738, translating to a diluted earnings per share of $0.05, compared to $5,657,519 and $0.03 in Q4 2024[44] - Adjusted Net Income for Q1 2025 was $10,678,022, or $0.05 per diluted share, down from $12,341,668 and $0.06 in Q4 2024[44] - Adjusted EBITDA for Q1 2025 was $46,437,553, with an Adjusted EBITDA margin of 59%, compared to $50,932,732 and 61% in Q4 2024[47] - The company reported a net interest expense of $9,408,728 for Q1 2025, down from $9,987,731 in Q4 2024[47] - The company reported a net income of $9,110,738 for Q1 2025, compared to $5,657,519 in Q4 2024, reflecting a positive trend in profitability[59] Capital Expenditures and Guidance - Capital expenditures for Q1 2025 were $32.5 million, which is 14% lower than Q4 2024, and within the company's guidance[4] - Updated full-year guidance indicates a 36% reduction in capital spending, now expected to be between $85 million and $113 million[20] - Capital spending for Q2 2025 is estimated to be between $14 million and $22 million, with a midpoint of $18 million[22] - The company plans to drill 2 to 3 new horizontal and vertical wells in Q2 2025, and 11 to 13 wells in 2H 2025[22] - The company anticipates spending on infrastructure upgrades and well reactivations as part of its capital program[22] Liquidity and Financial Position - The company maintained liquidity of $141.1 million at the end of Q1 2025, with $460 million in borrowings outstanding on its credit facility[18] - As of March 31, 2025, total assets increased to $1,505,610,274 from $1,408,099,474 as of December 31, 2024, representing a growth of approximately 6.9%[34] - Total liabilities increased to $629,644,216 as of March 31, 2025, from $549,459,492 as of December 31, 2024, reflecting an increase of approximately 14.6%[34] - The company’s additional paid-in capital rose to $808,627,109 as of March 31, 2025, compared to $800,419,719 as of December 31, 2024, an increase of approximately 1.0%[34] - The company’s retained earnings increased to $67,132,440 as of March 31, 2025, from $58,021,702 as of December 31, 2024, representing an increase of approximately 15.5%[34] - The company’s cash and cash equivalents decreased to $1,100,851 as of March 31, 2025, from $1,866,395 as of December 31, 2024, a decline of approximately 41.0%[36] Production and Sales Volumes - Sales volumes for Q1 2025 included 66% oil, 18% natural gas liquids, and 16% natural gas, reflecting a shift in product mix compared to previous quarters[6] - Total oil sales volumes for Q2 2025 are projected to be between 13,700 and 14,700 Bo/d, with a midpoint of 14,200 Bo/d[22] - Total sales volumes (Boe/d) for 2H 2025 are expected to range from 19,000 to 21,000, with a midpoint of 20,500 Bo/d[22] - Average daily sales volumes for oil in Q1 2025 were 12,074 Bbls/d, down from 12,916 Bbls/d in Q4 2024[32] - The oil mix as a percentage of total sales remained stable at 66% for both Q1 2025 and Q4 2024[32] Operating Expenses - Lease operating expenses were reported at $11.89 per Boe, which was within the company's guidance range[9] - Operating expenses per Boe for lease operating expenses were $11.89 in Q1 2025, up from $11.24 in Q4 2024[32] - All-in cash operating costs for Q1 2025 totaled $40,272,071, a decrease of 4.0% from $41,962,588 in Q4 2024[65] - All-in cash operating costs per Boe increased to $24.33 in Q1 2025 from $23.20 in Q4 2024, reflecting a 4.9% rise[65] - General and Administrative Expense (G&A) for Q1 2025 was $8,619,976, an increase of 7% from $8,035,977 in Q4 2024[53] Cash Flow and Investments - Cash provided by operating activities for the three months ended March 31, 2025, was $28,371,008, down from $47,279,681 in the previous quarter, a decrease of approximately 40.0%[36] - The company reported a net cash used in investing activities of $102,607,297 for the three months ended March 31, 2025, compared to $37,688,306 in the previous quarter, indicating a significant increase in investment outflows[36] - Adjusted Cash Flow from Operations for Q1 2025 was $38,156,007, compared to $42,206,005 in Q4 2024, indicating a decline of 10%[51] - Adjusted Free Cash Flow for Q1 2025 increased to $5,815,786, up 23% from $4,732,143 in Q4 2024[49] Hedging and Risk Management - The company has approximately 1.7 million barrels of oil hedged at an average downside protection price of $64.44 for the remainder of 2025[11] - The company has hedged 151,763 barrels of oil for Q2 2025 at a weighted average swap price of $68.53 per barrel[38] - The total hedged volume for natural gas in Q2 2025 is 513,900 MMBtu, with a weighted average swap price of $3.60[38] - The company has a hedged volume of 464,100 barrels of oil for Q2 2025 under two-way collars, with a weighted average put price of $60.00 and call price of $69.85[38] Other Financial Metrics - Consolidated EBITDAX for the last four quarters ending March 31, 2025, was $247,797,658, with a Leverage Ratio of 1.90, well below the maximum allowed of 3.00[60] - The company’s leverage ratio covenant remains strong at 1.90, indicating effective debt management and financial stability[60] - Changes in operating assets and liabilities resulted in a positive adjustment of $9,784,999 in Q1 2025, contrasting with a negative adjustment of $(5,073,676) in Q4 2024[51] - Unrealized losses on changes in the fair value of derivatives amounted to $375,196 in Q1 2025, compared to a loss of $6,999,552 in Q4 2024[47]

Financial Data and Key Metrics Changes - The company reported a net income of $9.1 million or $0.05 per diluted share for Q1 2025, compared to $5.7 million or $0.03 per diluted share in Q4 2024 [19] - Adjusted EBITDA for Q1 2025 was $46.4 million, down from $50.9 million in Q4 2024, primarily due to lower oil revenue [20] - Revenue for Q1 2025 was $79.1 million, with oil accounting for 97% of total revenue, while total sales volumes were 18,392 BOE per day, exceeding guidance [17][14] Business Line Data and Key Metrics Changes - The company sold 12,074 barrels of oil per day, exceeding the high end of guidance despite weather-related downtime [9] - Seven wells were drilled, completed, and placed on production in Q1 2025, with production from these assets averaging over 2,500 BOE per day in April, representing a 9% increase over initial estimates [10][11] - The acquisition of LimeRock CVP assets added over 40 gross drilling locations to the existing inventory, enhancing production metrics [10] Market Data and Key Metrics Changes - The overall realized price increased by 4% to $47.78 per BOE in Q1 2025 from $46.14 per BOE in Q4 2024 [15] - The average crude oil differential from NYMEX WTI futures pricing improved to negative $0.89 per barrel in Q1 2025 from negative $1.42 per barrel in Q4 2024 [16] - The company anticipates a modest reduction in production during the last half of the year, guiding to approximately 2% annual production growth over 2024 [12] Company Strategy and Development Direction - The company emphasizes a value-focused strategy aimed at maximizing cash flow generation and maintaining production levels in low price environments [25][26] - Capital spending for 2025 is expected to be reduced by more than 47%, with a focus on debt reduction and maintaining financial flexibility [12][23] - The company is actively pursuing organic growth opportunities in the Central Basin Platform while remaining selective in acquisitions [61][62] Management's Comments on Operating Environment and Future Outlook - Management noted the high level of oil price volatility and emphasized the importance of maintaining a strong financial position to navigate these challenges [25][28] - The company plans to allocate more cash flow to debt reduction rather than increasing capital spending, even if oil prices recover [27][28] - Management expressed confidence in the production outperformance from new wells and the benefits of the LimeRock acquisition to support future growth [12][28] Other Important Information - The company ended the period with $460 million drawn on its credit facility, with a leverage ratio of 1.9 times [20] - The company has approximately 1.7 million barrels of oil hedged for the last nine months of 2025, providing downside protection at an average price of $64.44 [21] - The company is focusing on acquiring and leasing opportunities in the Central Basin Platform to expand its inventory life [75] Q&A Session Summary Question: Does the company have a leverage target in mind for debt reduction? - Management stated the long-term goal for the leverage ratio is to be comfortably below one, emphasizing the importance of reducing debt in a low price environment [30][32] Question: Will cost improvements affect the capital spending guidance? - Management confirmed that current capital spending forecasts include current prices, and any cost reductions would be directed towards debt repayment rather than increasing project numbers [34][38] Question: What is the state of activity in the Central Basin Platform? - Management noted a mix of interest in the Central Basin Platform, with some larger operators entering the market, while the company remains focused on acquiring undervalued assets [56][60]

Ring Energy (REI) Q1 2025 Earnings Call May 08, 2025 12:00 PM ET Company Participants Al Petrie - IRPaul McKinney - Chairman & CEOTravis Thomas - EVP & CFOJeffrey Robertson - Managing DirectorShawn Young - SVP - OperationsNoel Parks - Managing Director - Energy ResearchJames Parr - EVP & Chief Exploration Officer Operator Good day, and welcome to the Ring Energy's First Quarter twenty twenty five Earnings Conference Call. All participants will be in a listen only mode. After today's presentation, there will ...

Financial Data and Key Metrics Changes - The company reported a net income of $9.1 million or $0.05 per diluted share for Q1 2025, compared to $5.7 million or $0.03 per diluted share in Q4 2024 [17] - Adjusted EBITDA for Q1 2025 was $46.4 million, down from $50.9 million in Q4 2024, primarily due to lower oil revenue [18] - Revenue for Q1 2025 was $79.1 million, reflecting a 5% decrease from the previous quarter, driven by a negative volume variance [14][15] Business Line Data and Key Metrics Changes - The company sold 12,074 barrels of oil per day and 18,392 barrels of oil equivalent (BOE) per day, both exceeding guidance [12][7] - The average well cost came in around 7% less than budget, indicating improved capital efficiency [7] - Production from newly acquired LimeRock assets averaged over 2,500 BOE per day in April, representing a 9% increase over initial estimates [9] Market Data and Key Metrics Changes - The overall realized price increased by 4% to $47.78 per BOE from $46.14 per BOE in Q4 2024 [12] - The average crude oil differential from NYMEX WTI futures pricing improved to negative $0.89 per barrel from negative $1.42 per barrel in the previous quarter [13] - The company anticipates a modest reduction in production during the last half of the year, guiding to approximately 2% annual production growth over 2024 [10] Company Strategy and Development Direction - The company emphasizes a value-focused strategy aimed at maximizing cash flow generation and maintaining a healthy financial position [24][25] - The strategy includes extreme capital discipline, focusing on high-return opportunities while reducing capital spending in response to the weakened price environment [21][25] - The company plans to leverage the production outperformance and benefits from the LimeRock acquisition to reduce capital spending and allocate more cash flow to debt reduction [25][26] Management's Comments on Operating Environment and Future Outlook - Management noted that current oil prices remain above breakeven requirements, but the industry is facing high levels of price volatility [23] - The company is focused on debt reduction and maintaining a low leverage ratio, with a long-term goal of being comfortably below one [29] - Management expressed confidence in navigating the current pricing headwinds and emphasized the importance of maintaining flexibility in capital allocation [20][40] Other Important Information - The company has hedged approximately 1.7 million barrels of oil with an average downside protection price of $64.44, covering about 47% of oil sales guidance [19] - The company expects total capital spending for 2025 to be between $85 million and $113 million, significantly lower than previous expectations [21] Q&A Session Summary Question: Does the company have a leverage target in mind for debt reduction? - Management stated that the long-term goal for the leverage ratio is to be comfortably below one, emphasizing the importance of reducing debt in a low price environment [29][30] Question: Will cost improvements affect the capital spending guidance? - Management confirmed that current capital spending forecasts include current prices, and any cost reductions would be directed towards debt repayment rather than increasing project numbers [33][36] Question: What is the state of activity on the Central Basin Platform? - Management noted a mix of interest in the Central Basin Platform, with some larger operators entering the market, while the company remains focused on acquiring undervalued assets [50][56]

This Presentation includes financial measures that are not in accordance with accounting principles generally accepted in the United States ("GAAP"), such as "Adjusted Net Income," "Adjusted EBITDA," "PV-10," "Adjusted Free Cash Flow" or "AFCF," "Adjusted Cash Flow from Operations" or "ACFFO," "Cash Return on Capital Employed" or "CROCE," "Leverage Ratio," "All- in Cash Operating Costs," and "Cash Operating Margin." While management believes that such measures are useful for investors, they should not be us ...

Group 1 - The article discusses the analysis of oil and gas companies, specifically focusing on Ring Energy and its acquisition of Lime Rock, which was completed at the end of the first quarter [2] - The author emphasizes the cyclical nature of the oil and gas industry, highlighting the need for patience and experience in navigating this sector [2] - The analysis includes a breakdown of key factors such as balance sheets, competitive positions, and development prospects of the companies involved [1] Group 2 - The article indicates that the author holds a beneficial long position in Ring Energy shares, either through stock ownership or derivatives [3] - It is noted that the insights provided in the article are based on the author's own opinions and experiences, without any external compensation [3] - The article serves as an example of the type of analysis available to members of the Oil & Gas Value Research service, which includes exclusive insights not published on free platforms [1]

Group 1 - Ring Energy reported quarterly earnings of $0.05 per share, missing the Zacks Consensus Estimate of $0.06 per share, and down from $0.10 per share a year ago, representing an earnings surprise of -16.67% [1] - The company posted revenues of $79.09 million for the quarter ended March 2025, missing the Zacks Consensus Estimate by 1.28%, and down from $94.5 million year-over-year [2] - Ring Energy shares have declined approximately 36.8% since the beginning of the year, compared to a decline of -4.7% for the S&P 500 [3] Group 2 - The current consensus EPS estimate for the coming quarter is $0.02 on revenues of $80.95 million, and for the current fiscal year, it is $0.16 on revenues of $336.04 million [7] - The Zacks Industry Rank for Oil and Gas - Exploration and Production - United States is currently in the bottom 25% of over 250 Zacks industries, indicating potential underperformance compared to higher-ranked industries [8]

Financial Performance - For the three months ended March 31, 2025, Ring Energy, Inc. reported revenues of $79,091,207, a decrease of 16.3% compared to $94,503,136 for the same period in 2024[17]. - The company’s net income for the first quarter of 2025 was $9,110,738, representing a 65.5% increase from $5,515,377 in the first quarter of 2024[17]. - The company incurred total costs and operating expenses of $56,735,326 for the first quarter of 2025, slightly down from $56,888,019 in the same quarter of 2024[17]. - For the three months ended March 31, 2025, total oil, natural gas, and natural gas liquids revenues were $79,091,207, a decrease from $94,503,136 in the same period of 2024, reflecting a negative total gas revenue due to lower realized sales prices[89]. - The Exploration and Production segment profit for Q1 2025 was $54,093,480, down 22.1% from $69,402,714 in Q1 2024[143]. - Net cash provided by operating activities for the first quarter of 2025 was $28,371,008, a decrease from $45,189,169 in the first quarter of 2024[23]. - The company reported a net loss on derivative contracts of $928,790 for the three months ended March 31, 2025, compared to a loss of $19,014,495 for the same period in 2024[107]. Assets and Liabilities - Total current assets decreased to $48,669,748 as of March 31, 2025, down from $50,448,092 at the end of 2024, reflecting a decline of 3.5%[15]. - Total assets increased to $1,505,610,274 as of March 31, 2025, compared to $1,408,099,474 at the end of 2024, marking a growth of 6.9%[15]. - The company’s total liabilities rose to $629,644,216 as of March 31, 2025, up from $549,459,492 at the end of 2024, an increase of 14.6%[15]. - Cash and cash equivalents decreased to $1,100,851 as of March 31, 2025, down from $1,866,395 at the end of 2024, a decline of 41%[15]. - The company had cash in excess of federally insured limits amounting to $850,851 as of March 31, 2025, down from $1,616,395 as of December 31, 2024[42]. - The company recorded an asset retirement obligation of $29,268,349 as of March 31, 2025, up from $26,382,517 at the end of 2024[127][128]. Acquisitions and Investments - Ring Energy, Inc. completed the Lime Rock Acquisition, resulting in an increase in common stock by 6,452,879 shares[20]. - Cash paid for the Lime Rock Acquisition totaled $70,859,769, which included $63,599,939 paid at closing and $5,000,000 released from escrow[25]. - The company completed the acquisition of Lime Rock Resources for a total consideration of $87,729,921, which includes $78,015,005 in cash and 6,452,879 shares of common stock[99][101]. - The fair value of oil and natural gas properties acquired in the Lime Rock Acquisition was recorded at $90,844,802[101]. - The company has a deferred cash payment of $10 million related to the Lime Rock Acquisition, due by December 31, 2025[99]. Revenue and Sales - Oil revenues decreased by approximately $15.8 million from $92.3 million to $76.5 million, with a volume variance of $(10.0) million and a price variance of $(5.8) million[162]. - Natural gas sales increased from a negative $0.8 million to a negative $0.3 million, with a volume increase of 118,689 Mcf, primarily driven by production increases in the Northwest Shelf[163]. - NGL sales slightly decreased by $0.1 million from $3.0 million to $2.9 million, with sales volumes increasing from 263,802 barrels to 299,366 barrels, a 13.5% increase[164]. - Average realized price per barrel of NGLs decreased by $1.82 to $9.65, down from $11.47, due to weaker market conditions[165]. Expenses and Costs - Lease operating expenses for the same period were $19,677,552, an increase of 7.2% from $18,360,434 in the prior year[143]. - Total lease operating expenses (LOE) increased from $18.4 million to $19.7 million, a 7% increase, with LOE per Boe rising from $10.60 to $11.89, a 12% increase[166]. - Gathering, transportation, and processing costs (GTP) increased from $166,054 to $203,612, a 23% increase, with GTP per Boe rising from $0.10 to $0.12, a 20% increase[167]. - General and administrative expenses increased from $7.5 million to $8.6 million, a 15% increase, with G&A per Boe rising from $4.31 to $5.21, a 21% increase[175]. - Interest expense decreased by $2.0 million from $11.5 million to $9.5 million, attributed to lower interest rates and reduced outstanding amounts on the Credit Facility[177]. Taxation - The Company recorded a deferred federal income tax provision of $(2,816,078) for the three months ended March 31, 2025, compared to $(1,551,759) in 2024, resulting in an effective tax rate of 25.03%[65]. - The company’s overall effective tax rate was higher than the federal statutory corporate tax rate, primarily due to state income taxes[65]. - The benefit from (provision for) income taxes changed from a provision of $1.7 million in 2024 to a provision of $3.0 million in 2025, reflecting an increase of 76%[181]. Derivative Instruments and Hedging - The company has hedged oil volumes totaling 1,000,000 barrels across various contracts with weighted average swap prices ranging from $63.80 to $71.41 for the upcoming quarters[185]. - The company has hedged natural gas volumes totaling 1,000,000 MMBtu with weighted average swap prices between $3.54 and $4.25 for the upcoming quarters[186]. - The company utilized derivative strategies to manage cash flow variability, including costless collars and swaps, to mitigate risks associated with crude oil and natural gas price fluctuations[102][103]. - As of March 31, 2025, the company reported commodity derivatives assets valued at $10,330,272 and liabilities of $(9,058,328), resulting in a total fair value of $1,271,944[118]. Operational Highlights - The company drilled and completed a total of 7 wells in the first quarter of 2025, including 4 horizontal wells in the Northwest Shelf and 3 vertical wells in the Central Basin Platform[154]. - The company aims to maximize cash flow in 2025 through cost monitoring and prudent capital allocation, focusing on high-return projects and acquisitions[183]. - The company is currently assessing the impact of ASU 2024-02, which is effective for fiscal years beginning after December 15, 2024, but is not expected to have a material impact on financial statements[81]. Internal Controls and Compliance - Management concluded that disclosure controls and procedures were effective as of the end of the reporting period[206]. - The company is committed to ongoing evaluation and enhancement of disclosure controls and internal financial reporting controls as funds allow[207]. - Regular reviews of internal control systems are conducted to improve efficiency and maintain an effective control environment[208]. - No changes in internal control over financial reporting materially affected the company during the three months ended March 31, 2025[209].

Core Insights - Ring Energy, Inc. reported strong operational and financial results for Q1 2025, exceeding guidance targets due to exceptional oil sales volumes and the successful acquisition of Lime Rock's CBP assets [1][3][5]. Financial Performance - Average daily sales volumes for Q1 2025 were 18,392 Boe/d, a decrease of 6% from Q4 2024 and 3% from Q1 2024 [6][7]. - The company sold 12,074 barrels of oil per day, exceeding the high end of guidance [5]. - Net income for Q1 2025 was $9.1 million, or $0.05 per diluted share, representing a 60% increase from Q4 2024 [6][9]. - Adjusted EBITDA was reported at $46.4 million, a 9% decrease from Q4 2024 [6][9]. - Revenues for Q1 2025 totaled $79.1 million, down 5% from Q4 2024, primarily due to a negative volume variance [9]. Operational Highlights - The company completed the acquisition of CBP assets from Lime Rock, which added approximately 2,300 Boe/d of low-decline net production and increased operational synergies [16][17]. - Capital expenditures for Q1 2025 were $32.5 million, 14% lower than Q4 2024, and within guidance [5][13]. - The company drilled and completed seven wells during Q1 2025, enhancing production capabilities [14][15]. Guidance and Strategy - For the remainder of 2025, Ring Energy has updated its guidance to reflect a 36% reduction in capital spending while maintaining sales volume guidance [3][20]. - The company expects total capital spending for 2025 to be between $85 million and $113 million, down from previous estimates [20][21]. - The updated guidance includes a focus on drilling, recompletions, and infrastructure upgrades, with flexibility to adapt to market conditions [20][21]. Balance Sheet and Liquidity - As of March 31, 2025, total liquidity was approximately $141.1 million, with $460 million in borrowings outstanding on its credit facility [19]. - The company is targeting continued debt reduction, contingent on market conditions and capital spending [19].