Ring Energy, Inc. (NYSE:REI) Q4 2020 Results Conference Call March 17, 2021 11:00 AM ET Company Participants David Fowler - Investor Relations Paul McKinney - Chairman & Chief Executive Officer Randy Broaddrick - Chief Financial Officer Alex Dyes - Executive Vice President of Engineering and Corporate strategy Marinos Baghdati - Executive Vice President of Operations Conference Call Participants Jeffrey Campbell - Alliance Global Partners Dun McIntosh - Johnson Rice Noel Parks - Touhy Brothers Richard Tul ...

Form 10-K General Information [Registrant Information](index=1&type=section&id=Registrant%20Information) Ring Energy, Inc is an accelerated filer with 99,181,587 common shares outstanding as of March 16, 2021 - Ring Energy, Inc. is an **accelerated filer**, not a well-known seasoned issuer[1](index=1&type=chunk)[2](index=2&type=chunk) - As of March 16, 2021, the company had **99,181,587 shares** of common stock outstanding[4](index=4&type=chunk) - The aggregate market value of common voting stock held by non-affiliates was **$74,553,881** as of June 30, 2020, based on a closing price of $1.16 per share[3](index=3&type=chunk) [Forward Looking Statements](index=5&type=section&id=Forward%20Looking%20Statements) The report contains forward-looking statements subject to risks like commodity price volatility and regulatory changes - All statements regarding strategy, future operations, financial position, estimated revenues and losses, projected costs, prospects, plans, and objectives are **forward-looking**[8](index=8&type=chunk) - Key factors that could cause actual results to differ materially include **declines in oil and natural gas prices**, ability to raise capital, operational risks, and environmental regulations[8](index=8&type=chunk) - The company undertakes **no obligation** to publicly update or revise any forward-looking statements after their date of issuance[9](index=9&type=chunk) PART I [Item 1: Business](index=6&type=section&id=Item%201%3A%20Business) Ring Energy is an independent oil and gas company focused on the Permian Basin, emphasizing debt reduction and strategic growth - Ring Energy, Inc. is a growth-oriented independent exploration and production company focused on oil and natural gas development in the **Permian Basin**[12](index=12&type=chunk) Company Metrics (as of Dec 31, 2020) | Metric | Value (as of Dec 31, 2020) | | :-------------------------------- | :------------------------- | | Leasehold Acreage (Gross) | 104,455 acres | | Leasehold Acreage (Net) | 76,745 acres | | Producing Wells (Gross) | 610 | | Producing Wells (Net) | 441 | | Proved Reserves (BOE) | 76.5 million | | Oil-weighted Reserves | 87% Oil, 13% Natural Gas | | Proved Developed (PD) Reserves | 57.5% | | Proved Undeveloped (PUD) Reserves | 42.5% | - The company's strategic vision includes operational excellence, generating free cash flow, and pursuing **accretive strategic acquisitions**[15](index=15&type=chunk)[16](index=16&type=chunk)[17](index=17&type=chunk)[18](index=18&type=chunk)[19](index=19&type=chunk)[21](index=21&type=chunk)[22](index=22&type=chunk) - In 2020, due to the drop in oil prices, Ring re-evaluated its capital expenditure budget, shifting focus to **reducing costs and paying down debt**[31](index=31&type=chunk) - The company drilled **6 new horizontal San Andres wells** in the Northwest Shelf in 2020[31](index=31&type=chunk) - **Significant management changes** occurred in late 2020, including the appointment of a new CEO and Chairman, Paul D. McKinney[24](index=24&type=chunk)[25](index=25&type=chunk)[26](index=26&type=chunk)[27](index=27&type=chunk)[28](index=28&type=chunk) - Operations are subject to extensive governmental regulations which can **increase costs and affect profitability**[44](index=44&type=chunk)[47](index=47&type=chunk)[58](index=58&type=chunk)[74](index=74&type=chunk)[79](index=79&type=chunk) - As of December 31, 2020, Ring Energy had **41 full-time employees**[91](index=91&type=chunk)[92](index=92&type=chunk)[93](index=93&type=chunk)[96](index=96&type=chunk) - In response to COVID-19, the company implemented **work-from-home provisions** and safe working protocols for production teams[97](index=97&type=chunk)[100](index=100&type=chunk) [Item 1A: Risk Factors](index=28&type=section&id=Item%201A%3A%20Risk%20Factors) The company faces significant risks from commodity price volatility, drilling uncertainties, hedging limitations, and regulatory changes - Horizontal drilling and completion techniques involve **additional operational risks** such as landing in the desired zone and successful fracture stimulation[101](index=101&type=chunk) - A substantial percentage (**43%**) of proved reserves are undeveloped, requiring significant capital and carrying a higher risk[104](index=104&type=chunk) - Hedging transactions may **limit potential gains** from price increases and expose the company to counterparty default risk[106](index=106&type=chunk)[107](index=107&type=chunk) - The **COVID-19 pandemic** significantly impacted global oil demand and prices, leading to production curtailments and a weaker industry outlook[111](index=111&type=chunk)[112](index=112&type=chunk) - A substantial or extended decline in oil and natural gas prices can **adversely affect revenues**, profitability, and the value of proved reserves[114](index=114&type=chunk)[115](index=115&type=chunk)[118](index=118&type=chunk)[119](index=119&type=chunk) - New governmental regulations, such as the moratorium on new federal leasing, could **materially affect operations**[116](index=116&type=chunk)[134](index=134&type=chunk) - The company's credit facility, with **$313 million outstanding**, contains covenants that limit financial flexibility[142](index=142&type=chunk)[274](index=274&type=chunk) - The market price of common stock may be **volatile** due to operating performance, commodity prices, and general economic conditions[145](index=145&type=chunk) [Item 1B: Unresolved Staff Comments](index=43&type=section&id=Item%201B%3A%20Unresolved%20Staff%20Comments) The company reported no unresolved staff comments from the SEC - There are **no unresolved staff comments**[152](index=152&type=chunk) [Item 2: Properties](index=43&type=section&id=Item%202%3A%20Properties) The company's properties are concentrated in the Permian Basin, with 76.5 million BOE of proved reserves as of year-end 2020 - The company's business strategy focuses on increasing stockholder value by **exploiting and developing existing properties** and pursuing strategic acquisitions[154](index=154&type=chunk) Proved Reserves Summary (as of December 31, 2020) | Metric | Value | | :----------------------------------- | :------------------- | | Oil (Bbl) | 66,264,286 | | Natural Gas (Mcf) | 61,305,027 | | Total (Boe) | 76,481,791 | | Pre-Tax PV10 Value | $638,107,637 | | Standardized Measure of Discounted Future Net Cash Flows | $555,871,253 | - Proved reserves are **87% oil** and 13% natural gas, with 57.5% classified as proved developed (PD)[13](index=13&type=chunk)[180](index=180&type=chunk) Proved Reserves by Type (2019 vs. 2020) | Reserve Type | 2020 (BOE) | 2019 (BOE) | | :----------------- | :----------- | :----------- | | Developed | 43,983,225 | 46,986,709 | | Undeveloped | 32,498,566 | 34,084,285 | | Total | 76,481,791 | 81,070,994 | - Reserve estimates for 2020 were based on significantly lower SEC average prices of **$36.04 per Bbl for oil** and **$1.99 per MMBtu for gas**[171](index=171&type=chunk) Changes in Proved Reserves (2019-2020) | Category | Oil (Bbl) Change | Gas (Mcf) Change | | :------------------------------------------ | :----------------- | :----------------- | | Improved recovery | +3,495,210 | +1,824,310 | | Production | (2,801,528) | (2,494,501) | | Upward revisions of estimates | +2,591,965 | +6,158,076 | | Downward revision (well performance) | (4,484,425) | +44,370 | | Downward revision (commodity prices) | (2,313,890) | (2,303,700) | | Downward revision (undeveloped locations removal) | (1,582,060) | (195,410) | - The company plans to convert **32.5 million BOE of PUD reserves** to PD by 2024 with estimated costs of $219.2 million[182](index=182&type=chunk)[186](index=186&type=chunk) Acreage Summary (as of December 31, 2020) | Region | Developed Gross (Net) | Undeveloped Gross (Net) | Total Gross (Net) | | :------------------- | :-------------------- | :---------------------- | :------------------ | | Central Basin Platform | 23,668 (18,712) | 15,046 (6,650) | 38,714 (25,362) | | Delaware Basin | 18,521 (18,256) | 248 (212) | 18,769 (18,468) | | Northwest Shelf | 11,723 (8,085) | 35,249 (24,830) | 46,972 (32,915) | | **Total** | **53,912 (45,053)** | **50,543 (31,692)** | **104,455 (76,745)** | Production History (2018-2020) | Metric | 2020 | 2019 | 2018 | | :-------------------- | :----------- | :----------- | :----------- | | Oil (Bbls) | 2,801,528 | 3,536,126 | 2,047,295 | | Gas (Mcf) | 2,494,502 | 2,476,472 | 1,112,177 | | Total production (BOE) | 3,217,278 | 3,948,871 | 2,232,658 | | Daily production (Boe/d) | 8,790 | 10,819 | 6,117 | Average Sales Price and Production Cost (2018-2020) | Metric | 2020 | 2019 | 2018 | | :------------------------------------ | :------- | :------- | :------- | | Average oil sales price (per Bbl) | $38.95 | $54.27 | $56.99 | | Average natural gas sales price (per Mcf) | $1.57 | $1.54 | $3.05 | | Total average sales price (per Boe) | $35.13 | $49.56 | $53.78 | | Average production cost (per Boe) | $11.49 | $12.28 | $12.45 | | Average production taxes (per Boe) | $1.63 | $2.31 | $2.52 | - In 2020, the company drilled **6 gross (5.61 net) productive development wells** in the Northwest Shelf, with no dry wells[205](index=205&type=chunk)[207](index=207&type=chunk) Costs Incurred for Property Acquisition, Exploration and Development (2019-2020) | Category | 2020 | 2019 | | :------------------------------------ | :----------- | :------------- | | Wishbone Acquisition | $0 | $304,392,921 | | Acquisition of proved properties | $1,317,313 | $3,400,411 | | Divestiture of proved properties | $0 | $(8,547,074) | | Development costs | $42,457,745 | $152,125,320 | | **Total Costs Incurred** | **$43,775,058** | **$451,371,578** | [Item 3: Legal Proceedings](index=57&type=section&id=Item%203%3A%20Legal%20Proceedings) The company is not currently involved in any material litigation or legal proceedings - The company does not have any **material litigation** pending or threatened[214](index=214&type=chunk) [Item 4: Mine Safety Disclosures](index=57&type=section&id=Item%204%3A%20Mine%20Safety%20Disclosures) This item is not applicable to Ring Energy, Inc - Mine safety disclosures are **not applicable** to the company[215](index=215&type=chunk) PART II [Item 5: Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](index=58&type=section&id=Item%205%3A%20Market%20for%20Registrant's%20Common%20Equity%2C%20Related%20Stockholder%20Matters%20and%20Issuer%20Purchases%20of%20Equity%20Securities) The company's common stock trades on the NYSE American under 'REI' and it does not currently pay cash dividends - Ring Energy's common stock is listed on the **NYSE American** under the trading symbol 'REI'[218](index=218&type=chunk) - As of March 1, 2021, there were approximately **21,632 holders of record** of the company's common stock[220](index=220&type=chunk) - The company does not currently anticipate paying **cash dividends**, intending to retain earnings to pay down debt and finance expansion[221](index=221&type=chunk) - The company did not make any **repurchases of its equity securities** during the year ending December 31, 2020[222](index=222&type=chunk) [Item 6: Selected Financial Data](index=59&type=section&id=Item%206%3A%20Selected%20Financial%20Data) The company reported a significant net loss in 2020 due to a ceiling test impairment, contrasting with net income in prior years Selected Statement of Operations Data (2018-2020) | Metric | 2020 | 2019 | 2018 | | :------------------------------------ | :------------- | :------------- | :------------- | | Revenues | $113,025,138 | $195,702,831 | $120,065,361 | | Cost of revenues | $42,196,963 | $57,626,604 | $33,433,082 | | Depreciation, depletion and amortization | $43,010,660 | $56,204,269 | $39,024,886 | | Ceiling test impairment | $277,501,943 | $0 | $14,172,309 | | Net income (loss) | $(253,411,828) | $29,496,551 | $8,999,760 | | Basic income (loss) per common share | $(3.48) | $0.44 | $0.15 | | Diluted income (loss) per common share | $(3.48) | $0.44 | $0.15 | Selected Balance Sheet Data (2019-2020) | Metric | 2020 | 2019 | | :------------------------------------ | :------------- | :------------- | | Current assets | $20,799,890 | $38,708,541 | | Oil and gas properties subject to amortization | $836,514,815 | $1,083,966,135 | | Total assets | $663,456,197 | $973,006,148 | | Total current liabilities | $36,941,737 | $59,092,554 | | Total long-term liabilities | $331,748,647 | $390,403,661 | | Total Stockholders Equity | $294,765,813 | $523,509,933 | [Item 7: Management's Discussion and Analysis of Financial Condition and Results of Operations](index=60&type=section&id=Item%207%3A%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses the adverse impact of low 2020 oil prices, which led to a $277.5 million impairment and a focus on debt reduction - The COVID-19 pandemic and OPEC+ price war caused a **sharp drop in oil prices** in 2020, leading to a strategic shift to cost reduction[228](index=228&type=chunk)[229](index=229&type=chunk)[233](index=233&type=chunk)[234](index=234&type=chunk) - Oil sales represented approximately **96.5% of total revenue** in 2020, making the company highly sensitive to oil price fluctuations[236](index=236&type=chunk) Derivative Contracts (as of December 31, 2020) | Commodity | Year | Type | Volume (per day) | Price Range/Average | | :---------- | :--- | :----------- | :--------------- | :------------------ | | Oil | 2021 | Costless Collars | 4,500 Bbl | Floor: $40.00-$45.00 (Avg $42.22); Ceiling: $52.71-$55.35 (Avg $54.57) | | Oil | 2021 | Swaps | 4,500 Bbl | Avg $45.42 | | Oil | 2022 | Swaps | 1,750 Bbl | Avg $44.84 | | Natural Gas | 2021 | Swaps | 6,000 MMBTU | $2.991 | | Natural Gas | 2022 | Swaps | 5,000 MMBTU | $2.7255 | - The company recorded a **realized gain on derivatives of $22.5 million** in 2020, with an unrealized loss of $1.2 million[236](index=236&type=chunk)[252](index=252&type=chunk)[253](index=253&type=chunk) - The borrowing base of the Credit Facility was **reduced twice in 2020**, from $425 million to $350 million[239](index=239&type=chunk)[271](index=271&type=chunk)[274](index=274&type=chunk) Key Financial Performance (2019 vs. 2020) | Metric | 2020 | 2019 | Change (YoY) | | :------------------------------------ | :------------- | :------------- | :------------- | | Oil and Natural Gas Sales | $113.0 million | $195.7 million | $(82.7) million | | Oil Sales | $109.1 million | $191.9 million | $(82.8) million | | Natural Gas Sales | $3.9 million | $3.8 million | $0.1 million | | Average Oil Price (per Bbl) | $38.95 | $54.27 | $(15.32) | | Average Natural Gas Price (per Mcf) | $1.57 | $1.54 | $0.03 | | Production Costs (incl. ad valorem) | $37.0 million | $48.5 million | $(11.5) million | | Production Costs (per BOE) | $11.49 | $12.28 | $(0.79) | | Depreciation, Depletion & Amortization | $43.0 million | $56.2 million | $(13.2) million | | Ceiling Test Impairment | $277.5 million | $0 | $277.5 million | | Realized Gain (Loss) on Derivatives | $22.5 million | $0 | $22.5 million | | Net Income (Loss) | $(253.4) million | $29.5 million | $(282.9) million | | Basic EPS | $(3.48) | $0.44 | $(3.92) | | Interest Expense | $17.6 million | $13.9 million | $3.7 million | | Deposit Forfeiture Income | $5.5 million | $0 | $5.5 million | - The company closed two equity offerings in October 2020, raising total **net proceeds of $19.4 million**[277](index=277&type=chunk) Cash Flows from Operating Activities (2018-2020) | Year | Net Cash Provided by Operating Activities | | :--- | :---------------------------------------- | | 2020 | $72,159,255 | | 2019 | $106,616,221 | | 2018 | $70,357,321 | - The company's critical accounting policies include revenue recognition, the **full cost method**, and the write-down of properties (ceiling test)[291](index=291&type=chunk)[292](index=292&type=chunk)[293](index=293&type=chunk)[294](index=294&type=chunk)[297](index=297&type=chunk) [Item 7A: Quantitative and Qualitative Disclosures About Market Risk](index=77&type=section&id=Item%207A%3A%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company faces market risks from commodity price volatility, which it mitigates with derivative contracts - The company's major market risk exposure is the **volatile pricing of oil and natural gas**[303](index=303&type=chunk) - To reduce price uncertainty, the company uses **crude oil and natural gas hedging arrangements**, including costless collars and swaps[304](index=304&type=chunk) Major Customers and Accounts Receivable (as of December 31, 2020) | Customer | % of Oil and Natural Gas Revenues (2020) | % of Accounts Receivable (2020) | | :--------- | :--------------------------------------- | :------------------------------ | | Phillips 66 | 68% | 80% | | Occidental Energy Marketing | 10% | 0% | | NGL Crude Partners | 8% | 5% | - The company is subject to **interest rate risk** on its $313 million outstanding Credit Facility, which bears variable interest[309](index=309&type=chunk)[310](index=310&type=chunk) [Item 8: Financial Statements and Supplementary Data](index=79&type=section&id=Item%208%3A%20Financial%20Statements%20and%20Supplementary%20Data) This item refers to the location of the company's audited financial statements within the Annual Report - The financial statements and supplementary data are included starting at **page F-1** of this Annual Report[312](index=312&type=chunk) [Item 9: Changes in and Disagreements with Accountants on Accounting and Financial Disclosure](index=79&type=section&id=Item%209%3A%20Changes%20in%20and%20Disagreements%20with%20Accountants%20on%20Accounting%20and%20Financial%20Disclosure) The company reported no changes in or disagreements with its accountants - There are **no changes in or disagreements with accountants** on accounting and financial disclosure[313](index=313&type=chunk) [Item 9A: Controls and Procedures](index=79&type=section&id=Item%209A%3A%20Controls%20and%20Procedures) Management concluded that the company's disclosure controls and procedures were effective as of December 31, 2020 - Management concluded that the company's disclosure controls and procedures were **effective** as of December 31, 2020[314](index=314&type=chunk) - The company **remediated a material weakness** identified in 2019 by incorporating additional review into its quarterly process[315](index=315&type=chunk) - Management assessed that the company's internal control over financial reporting was **effective** as of December 31, 2020[319](index=319&type=chunk) - Eide Bailly LLP issued an **attestation report** on the effectiveness of internal control over financial reporting[320](index=320&type=chunk)[342](index=342&type=chunk) [Item 9B: Other Information](index=81&type=section&id=Item%209B%3A%20Other%20Information) The company reported no other information requiring disclosure under this item - There is **no other information** to report under this item[321](index=321&type=chunk) PART III [Item 10: Directors, Executive Officers and Corporate Governance](index=81&type=section&id=Item%2010%3A%20Directors%2C%20Executive%20Officers%20and%20Corporate%20Governance) Information regarding directors and corporate governance is incorporated by reference from the 2021 Proxy Statement - Information for this item is **incorporated by reference** from the 2021 Proxy Statement[323](index=323&type=chunk) [Item 11: Executive Compensation](index=81&type=section&id=Item%2011%3A%20Executive%20Compensation) Information regarding executive compensation is incorporated by reference from the 2021 Proxy Statement - Information for this item is **incorporated by reference** from the 2021 Proxy Statement[324](index=324&type=chunk) [Item 12: Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters](index=82&type=section&id=Item%2012%3A%20Security%20Ownership%20of%20Certain%20Beneficial%20Owners%20and%20Management%20and%20Related%20Stockholder%20Matters) Information regarding security ownership is incorporated by reference from the 2021 Proxy Statement - Information for this item is **incorporated by reference** from the 2021 Proxy Statement[325](index=325&type=chunk) [Item 13: Certain Relationships and Related Transactions, and Director Independence](index=82&type=section&id=Item%2013%3A%20Certain%20Relationships%20and%20Related%20Transactions%2C%20and%20Director%20Independence) Information regarding related transactions and director independence is incorporated by reference from the 2021 Proxy Statement - Information for this item is **incorporated by reference** from the 2021 Proxy Statement[326](index=326&type=chunk) [Item 14: Principal Accounting Fees and Services](index=82&type=section&id=Item%2014%3A%20Principal%20Accounting%20Fees%20and%20Services) Information regarding accounting fees is incorporated by reference from the 2021 Proxy Statement - Information for this item is **incorporated by reference** from the 2021 Proxy Statement[327](index=327&type=chunk) PART IV [Item 15: Exhibits, Financial Statement Schedules](index=82&type=section&id=Item%2015%3A%20Exhibits%2C%20Financial%20Statement%20Schedules) This section lists the financial statements, supplementary data, and various exhibits filed with the Annual Report - The financial statements filed with this Annual Report include the Report of Independent Registered Public Accounting Firm, Balance Sheets, and Statements of Operations[329](index=329&type=chunk)[330](index=330&type=chunk) - A comprehensive list of exhibits, including agreements, charters, and certifications, is provided[331](index=331&type=chunk)[333](index=333&type=chunk) Financial Statements [Report of Independent Registered Public Accounting Firm](index=89&type=section&id=Report%20of%20Independent%20Registered%20Public%20Accounting%20Firm) Eide Bailly LLP issued an unqualified opinion on the financial statements and internal controls as of December 31, 2020 - Eide Bailly LLP provided an **unqualified opinion** on the financial statements and the effectiveness of internal control over financial reporting[341](index=341&type=chunk)[342](index=342&type=chunk) - Critical audit matters identified include the **estimation of proved oil and natural gas reserves** and the valuation allowance of deferred tax assets[349](index=349&type=chunk)[350](index=350&type=chunk)[356](index=356&type=chunk)[357](index=357&type=chunk) [Balance Sheets](index=94&type=section&id=Balance%20Sheets) Total assets decreased to $663.5 million in 2020 from $973.0 million in 2019, driven by a property impairment Balance Sheet Summary (as of December 31, 2019 and 2020) | Metric | 2020 | 2019 | | :------------------------------------------ | :------------- | :------------- | | Cash and cash equivalents | $3,578,634 | $10,004,622 | | Total Current Assets | $20,799,890 | $38,708,541 | | Oil and natural gas properties subject to amortization | $836,514,815 | $1,083,966,135 | | Net Properties and Equipment | $638,782,560 | $929,216,155 | | Total Assets | $663,456,197 | $973,006,148 | | Total Current Liabilities | $36,941,737 | $59,092,554 | | Revolving line of credit | $313,000,000 | $366,500,000 | | Total Liabilities | $368,690,384 | $449,496,215 | | Total Stockholders' Equity | $294,765,813 | $523,509,933 | [Statements of Operations](index=95&type=section&id=Statements%20of%20Operations) The company reported a net loss of $253.4 million in 2020, driven by a $277.5 million ceiling test impairment Statements of Operations Summary (2018-2020) | Metric | 2020 | 2019 | 2018 | | :------------------------------------------ | :------------- | :------------- | :------------- | | Oil and Natural Gas Revenues | $113,025,138 | $195,702,831 | $120,065,361 | | Oil and natural gas production costs | $36,968,873 | $48,496,225 | $27,801,989 | | Depreciation, depletion and amortization | $43,010,660 | $56,204,269 | $39,024,886 | | Ceiling test impairment | $277,501,943 | $0 | $14,172,309 | | General and administrative expense | $16,874,050 | $19,866,706 | $12,867,686 | | Realized gain (loss) on derivatives | $22,522,591 | $0 | $(11,153,701) | | Deposit forfeiture income | $5,500,000 | $0 | $0 | | Net Income (Loss) | $(253,411,828) | $29,496,551 | $8,999,760 | | Basic Earnings (Loss) per share | $(3.48) | $0.44 | $0.15 | | Diluted Earnings (Loss) per share | $(3.48) | $0.44 | $0.15 | [Statements of Stockholders' Equity](index=96&type=section&id=Statements%20of%20Stockholders'%20Equity) Stockholders' equity decreased to $294.8 million in 2020 from $523.5 million in 2019, primarily due to the net loss Statements of Stockholders' Equity Summary (2018-2020) | Metric | 2020 | 2019 | 2018 | | :------------------------------------------ | :------------- | :------------- | :------------- | | Balance, December 31 | $294,765,813 | $523,509,933 | $462,599,430 | | Common stock shares outstanding | 85,568,287 | 67,993,797 | 63,229,710 | | Additional paid-in capital | $550,951,415 | $526,301,281 | $494,892,093 | | Accumulated deficit | $(256,271,170) | $(2,859,342) | $(32,355,893) | | Net (loss) / income | $(253,411,828) | $29,496,551 | $8,999,760 | | Common stock and warrants issued for cash, net | $19,379,832 | $0 | $81,821,138 | | Share-based compensation | $5,364,162 | $3,082,625 | $3,870,934 | [Statements of Cash Flows](index=97&type=section&id=Statements%20of%20Cash%20Flows) Cash from operations decreased to $72.2 million in 2020, while investing activities saw a significant reduction in spending Statements of Cash Flows Summary (2018-2020) | Metric | 2020 | 2019 | 2018 | | :------------------------------------------ | :------------- | :------------- | :------------- | | Net Cash Provided by Operating Activities | $72,159,255 | $106,616,221 | $70,357,321 | | Net Cash Used in Investing Activities | $(43,830,397) | $(423,040,251) | $(203,421,314) | | Net Cash Provided by (Used in) Financing Activities | $(34,754,846) | $323,064,926 | $121,421,138 | | Net Increase (Decrease) in Cash | $(6,425,988) | $6,640,896 | $(11,642,855) | | Cash at End of Period | $3,578,634 | $10,004,622 | $3,363,726 | | Cash paid for interest | $16,911,344 | $10,364,313 | $323,916 | - In 2020, the company made payments of **$42.5 million** to develop oil and natural gas properties, a significant decrease from $152.1 million in 2019[370](index=370&type=chunk) - The company repaid **$80 million** on its revolving line of credit in 2020, compared to no repayments in 2019 or 2018[370](index=370&type=chunk) [Notes to Financial Statements](index=98&type=section&id=Notes%20to%20Financial%20Statements) The notes detail accounting policies, including the full cost method and the $277.5 million ceiling test impairment in 2020 - The company uses the **full cost method** of accounting for oil and natural gas properties, capitalizing all related costs[380](index=380&type=chunk) - A quarterly ceiling test is performed, which resulted in a **$277.5 million impairment** in 2020[294](index=294&type=chunk)[295](index=295&type=chunk)[384](index=384&type=chunk) - Revenue from oil and natural gas sales is recognized when **control transfers to the purchaser** at the point of delivery[389](index=389&type=chunk) - In 2020, the company recorded a full **valuation allowance of $50.6 million** against its deferred tax asset[393](index=393&type=chunk)[478](index=478&type=chunk) - The company recorded **$5.5 million in deposit forfeiture income** in 2020 from a terminated asset sale agreement[254](index=254&type=chunk)[425](index=425&type=chunk) - Derivative financial instruments are recorded at **fair value** on the balance sheet, with changes recognized in earnings[401](index=401&type=chunk)[440](index=440&type=chunk) - In 2020, officers and directors voluntarily returned **2,265,000 stock options**, resulting in an additional compensation expense of $768,379[460](index=460&type=chunk) - The company **accelerated the vesting** of 1,131,955 shares of restricted stock in 2020, incurring an additional compensation expense of $2.4 million[461](index=461&type=chunk) Asset Retirement Obligation Reconciliation (2018-2020) | Metric | 2020 | 2019 | 2018 | | :------------------------------------ | :------------- | :------------- | :------------- | | Balance, December 31 | $17,117,135 | $16,787,219 | $13,055,797 | | Liabilities acquired | $0 | $3,745,642 | $2,571,549 | | Liabilities incurred | $99,436 | $631,727 | $1,311,956 | | Liabilities settled | $(710,577) | $(1,589,654) | $(577,824) | | Accretion expense | $906,616 | $943,707 | $606,459 | - Subsequent to year-end, the company entered into a **new office sublease** and completed an asset sale for $2 million cash[285](index=285&type=chunk)[286](index=286&type=chunk)[483](index=483&type=chunk)[484](index=484&type=chunk) [Supplemental Information on Oil and Natural Gas Producing Activities](index=131&type=section&id=Supplemental%20Information%20on%20Oil%20and%20Natural%20Gas%20Producing%20Activities) This section provides supplemental unaudited data on oil and gas operations, highlighting the 2020 net loss and reserve changes Results of Oil and Natural Gas Producing Operations (2018-2020) | Metric | 2020 | 2019 | 2018 | | :------------------------------------------ | :------------- | :------------- | :------------- | | Oil and natural gas sales | $113,025,138 | $195,702,831 | $120,065,361 | | Production costs | $(36,968,873) | $(48,496,225) | $(27,801,989) | | Production taxes | $(5,228,090) | $(9,130,379) | $(5,631,093) | | Depreciation, depletion, amortization and accretion | $(43,010,660) | $(56,204,269) | $(39,024,886) | | Ceiling test impairment | $(277,501,943) | $0 | $(14,172,309) | | General and administrative (exclusive of corporate overhead) | $(1,454,041) | $(5,696,189) | $(1,404,635) | | **Results of Oil and Natural Gas Producing Operations** | **$(251,138,469)** | **$76,175,769** | **$32,030,449** | - The standardized measure of discounted future net cash flows for proved reserves **decreased from $923.2 million to $555.9 million** in 2020[493](index=493&type=chunk)[495](index=495&type=chunk) Changes in Standardized Measure of Discounted Future Net Cash Flows (2019-2020) | Category | 2020 | 2019 | | :------------------------------------------ | :------------- | :------------- | | Beginning of the year | $923,175,051 | $455,944,641 | | Net changes in price and production costs | $(368,974,767) | $(219,608,128) | | Revision of previous quantity estimates as a result of commodity prices | $(26,590,142) | $(71,545,320) | | Revision of estimated timing of cash flows | $(139,039,115) | $(107,443,484) | | Net change in income taxes | $97,384,365 | $(92,073,360) | | End of the Year | $555,871,553 | $923,175,051 |

Financial Data and Key Metrics Changes - For Q3 2020, the company reported revenues of $31.5 million, a net loss of $2 million, and a loss per diluted share of $0.03, which included a pretax unrealized loss on hedges of $6.2 million [8] - For the nine months ended September 30, 2020, revenues were $81.7 million, with a net loss of $93.2 million and a loss per diluted share of $1.37 [9] - Adjusted EBITDA increased almost 45% over the prior quarter, and free cash flow increased almost 46% [5] Business Line Data and Key Metrics Changes - Oil sales for Q3 were 781,626 barrels, and gas sales were 581,123 MCF, totaling 878,480 BOE, with average received prices of $38.80 per barrel of oil and $1.96 per MCF of gas [12] - For the nine-month period, oil sales were 266,980 barrels, and gas sales were 1,764,165 MCF, totaling 2,361,008 BOE, with average received prices of $38.40 per barrel of oil and $1.30 per MCF of gas [13] Market Data and Key Metrics Changes - The company reduced its bank debt by $15 million, exiting the quarter with almost $18 million in cash and over $32 million in liquidity [5] - The differential between the oil price received and WTI averaged approximately $2 per barrel [13] Company Strategy and Development Direction - The company plans to focus on consolidating existing assets that are similar or accretive to its long-life, shallow decline assets [41][42] - The company aims to utilize cash flows to continue reducing debt under its credit facility [14] - The management emphasized the importance of evaluating investment opportunities based on liquidity improvement, especially in the current low commodity price environment [37][38] Management's Comments on Operating Environment and Future Outlook - The management acknowledged challenges due to the pandemic and economic downturn, which are keeping energy prices at historically low levels [30] - The company is planning its business assuming prices will remain low and is focused on maintaining liquidity [31][32] - Management expressed confidence in the company's low decline, long-life production base, which requires less capital to maintain production levels [31][72] Other Important Information - The company completed a public offering and a registered direct offering, raising approximately $20.8 million in gross proceeds [18] - The company has recorded four consecutive quarters of positive post-CapEx cash flow [14] Q&A Session Summary Question: How does the company evaluate bringing back a rig versus doing a deal? - The decision is based on the merits of each investment opportunity, with a preference for acquiring assets in the current environment due to additional value from undeveloped opportunities [68] Question: What are the costs associated with new wells? - The estimated cost for a new well on the Northwest shelf is about $2.2 million, while on the Central Basin platform, it could be around $2 million or less [79] Question: What is the maintenance CapEx budget and development plan if current prices persist? - The company is willing to allow some production decline but prefers to maintain liquidity and will exhaust higher return opportunities before picking up a drilling rig [108]

Corporate Presentation November 2020 www.ringenergy.com www.ringenergy.com www.ringenergy.com OTCQX:RNGE NYSE American: REI Forward-Looking Statements and Cautionary Note Regarding Hydrocarbon Disclosures Forward –Looking Statements This Presentation includes "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995, the Securities Act of 1933 and the Securities Exchange Act of 1934. All statements, other than statements of historical facts included in this Pres ...

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Corporate Presentation August 2020 www.ringenergy.com www.ringenergy.com www.ringenergy.com OTCQX:RNGE NYSE American: REI Forward-Looking Statements and Cautionary Note Regarding Hydrocarbon Disclosures Forward –Looking Statements This Presentation includes "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995, the Securities Act of 1933 and the Securities Exchange Act of 1934. All statements, other than statements of historical facts included in this Presen ...

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended: June 30, 2020 ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission File Number: 001-36057 RING ENERGY, INC. (Exact Name of registrant as specified in its charter) (State or other jurisdiction of incorporation or organization) Nevada 90-04064 ...

Ring Energy, Inc. (NYSE:REI) Q1 2020 Earnings Conference Call May 12, 2020 11:00 AM ET Company Participants Tim Rochford - Chairman of the Board of Directors Kelly Hoffman - Chief Executive Officer David Fowler - President Randy Broaddrick - Chief Financial Officer Danny Wilson - Executive Vice President and Head of Operations Hollie Lamb - Vice President of Engineering Conference Call Participants Neal Dingmann - SunTrust Robinson John White - Roth Capital Richard Tullis - Capital One Noel Parks - Coker & ...

Corporate Presentation May 2020 www.ringenergy.com www.ringenergy.comOTCQX:RNGE NYSE American: REI Forward-Looking Statements and Cautionary Note Regarding Hydrocarbon Disclosures Forward –Looking Statements This Presentation includes "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995, the Securities Act of 1933 and the Securities Exchange Act of 1934. All statements, other than statements of historical facts included in this Presentation regarding the Co ...