Ring Energy(REI) - 2024 Q3 - Quarterly Results

Executive Summary & Highlights This section provides an overview of Ring Energy's strong Q3 2024 performance, including record sales, strategic divestitures, debt reduction, and the CEO's strategic outlook for maximizing cash flow and pursuing growth Q3 2024 Key Highlights Ring Energy achieved record Q3 2024 sales volumes, strategically divested non-core assets, significantly reduced debt, and increased liquidity, marking its 20th consecutive quarter of positive cash flow - Produced record sales of 20,108 barrels of oil equivalent per day ("Boe/d") (66% oil), exceeding the high end of guidance[2] - Reported net income of $33.9 million, or $0.17 per diluted share, and Adjusted Net Income of $13.4 million, or $0.07 per diluted share[2] - Divested non-core vertical wells and associated facilities in the Central Basin Platform for $5.5 million[2] - Reduced outstanding borrowings on the Company's credit facility by $15.0 million during the third quarter, totaling $33.0 million YTD, ending the period with $392.0 million in outstanding borrowings[2] - Increased liquidity to a record $208.0 million and maintained Leverage Ratio at 1.59x as of September 30, 2024[2] CEO Commentary & Strategic Outlook CEO Paul D. McKinney emphasized successful drilling, asset divestiture, and debt reduction, outlining a strategy focused on maximizing cash flow, further debt reduction, and organic inventory growth, alongside potential accretive acquisitions - The Company's strong Q3 performance is a direct reflection of successful drilling and completion programs and continued focus on reducing all-in cash operating costs[2] - Debt was reduced by another $15 million during the period, bringing total debt to $392 million, which is $5 million less than prior to the Founders acquisition, despite higher production[2] - Strategy for Q4 2024 and 2025 focuses on maximizing cash flow generation and further debt reduction, with capital allocation subject to commodity prices[2] - New strategy includes testing opportunities to unlock new producing zones on existing acreage for organic inventory growth, alongside pursuing strategic, accretive, and balance sheet-enhancing acquisitions[3] Third Quarter 2024 Financial & Operational Results This section details Ring Energy's Q3 2024 financial and operational performance, covering record sales volumes, realized prices, operating expenses, capital expenditures, asset divestiture, and balance sheet liquidity Sales Volumes, Prices and Revenues Ring Energy achieved record Q3 2024 sales volumes driven by acquisitions and new production, though overall revenues decreased due to lower realized prices, especially for natural gas and NGLs, impacted by fee reductions and takeaway constraints Sales Volumes, Prices and Revenues (Q3 2024 vs. Q2 2024 & Q3 2023) | Metric | Q3 2024 | Q2 2024 | Q3 2024 to Q2 2024 % Change | Q3 2023 | Q3 2024 to Q3 2023 % Change | |:---|:---|:---|:---|:---|:---| | Average Daily Sales Volumes (Boe/d) | 20,108 | 19,786 | 2% | 17,509 | 15% | | Crude Oil (Bo/d) | 13,204 | 13,623 | (3)% | 12,028 | 10% | | Net Sales (MBoe) | 1,849.9 | 1,800.6 | 3% | 1,610.9 | 15% | | Realized Price - All Products ($/Boe) | $48.24 | $55.06 | (12)% | $58.16 | (17)% | | Realized Price - Crude Oil ($/Bo) | $74.43 | $80.09 | (7)% | $81.69 | (9)% | | Revenues ($MM) | $89.2 | $99.1 | (10)% | $93.7 | (5)% | - Third quarter 2024 sales volumes were a record 20,108 Boe/d (66% oil, 15% natural gas and 19% NGLs), positively impacted by the Founders Acquisition and incremental production from development programs[4] - Realized natural gas price was $(2.26) per Mcf and NGL price was $7.66 per barrel, both impacted by fee reductions. Weighted average natural gas price reflects continued natural gas product takeaway constraints[5] - Revenues decreased to $89.2 million in Q3 2024 from $99.1 million in Q2 2024, primarily due to a decrease in overall realized pricing, partially offset by increased sales volumes[7] Operating Expenses Lease Operating Expense was within guidance, Gathering, Transportation and Processing costs were reclassified, ad valorem taxes increased, while DD&A remained stable and G&A expenses decreased both quarter-over-quarter and year-over-year Key Operating Expenses per Boe (Q3 2024 vs. Q2 2024 & Q3 2023) | Expense Category | Q3 2024 ($/Boe) | Q2 2024 ($/Boe) | Q3 2023 ($/Boe) | |:---|:---|:---|:---|\n| Lease Operating Expense (LOE) | $10.98 | $10.72 | $11.18 | | Ad Valorem Taxes | $1.17 | $0.74 | $1.10 | | Production Taxes | $2.27 | $2.01 | $2.95 | | Depreciation, Depletion and Amortization (DD&A) | $13.87 | $13.72 | $13.65 | | Asset Retirement Obligation Accretion | $0.19 | $0.20 | $0.22 | | General and Administrative Expenses (G&A) | $3.47 | $4.28 | $4.40 | - LOE of $10.98 per Boe was near the midpoint of the Company's guidance of $10.50 to $11.25 per Boe[8] - The majority of Gathering, Transportation and Processing (GTP) costs are now reflected as a reduction to the natural gas sales price, not as an expense item, due to a contractual change effective May 1, 2022[9] - G&A was $6.4 million ($3.47 per Boe) for Q3 2024, down from $7.7 million ($4.28 per Boe) in Q2 2024 and $7.1 million ($4.40 per Boe) in Q3 2023[12] Other Financial Items Interest expense slightly decreased, while the company recorded a significant net gain on commodity derivative contracts, primarily from an unrealized non-cash gain, and income tax provision increased Other Financial Items (Q3 2024 vs. Q2 2024 & Q3 2023) | Metric | Q3 2024 ($MM) | Q2 2024 ($MM) | Q3 2023 ($MM) | |:---|:---|:---|:---|\n| Interest Expense | $10.8 | $10.9 | $11.4 | | Derivative (Loss) Gain | $24.7 (gain) | $(1.8) (loss) | $(39.2) (loss) | | Income Tax Provision (Benefit) | $10.1 (provision) | $6.8 (provision) | $3.4 (benefit) | - The net gain on commodity derivative contracts in Q3 2024 was $24.7 million, including a realized $1.9 million cash loss and an unrealized $26.6 million non-cash gain[14] - For the remainder of 2024 (October-December), approximately 48% of oil sales guidance midpoint and 32% of natural gas sales guidance midpoint are hedged[15] Capital Expenditures & Development Activities Q3 2024 capital expenditures were within guidance, with 13 wells drilled and 11 completed across horizontal and vertical developments in the Northwest Shelf and Central Basin Platform - Capital expenditures in Q3 2024 were $42.7 million, within the guidance range of $35 million to $45 million[20] - 13 wells were drilled and 11 wells were completed and placed on production during the quarter, also within guidance[20] - Development included three horizontal wells in the Northwest Shelf, four horizontal wells in the Central Basin Platform (two completed in October), and six vertical wells in the Central Basin Platform[20] Wells Drilled and Completed by Quarter (2024) | Quarter | Area | Wells Drilled | Wells Completed | DUC | |:---|:---|:---|:---|:---|\n| 1Q 2024 | Northwest Shelf (Horizontal) | 2 | 2 | — | | | Central Basin Platform (Horizontal) | 3 | 3 | — | | | Central Basin Platform (Vertical) | 6 | 6 | — | | | Total | 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 | Asset Divestiture Ring Energy completed the sale of non-core oil and gas properties in Andrews and Gaines Counties, Texas, for $5.5 million, with the buyer assuming a $2.7 million asset retirement obligation - Sale of certain oil and gas properties (vertical wells and associated facilities) in Andrews and Gaines Counties, Texas, was completed on September 30, 2024[18] - The sale generated $5.5 million and included the buyer assuming an asset retirement obligation balance of approximately $2.7 million[18] Balance Sheet and Liquidity Total liquidity increased by 7% to $208.0 million, with outstanding borrowings on the credit facility reduced by $15 million to $392 million against a $600 million borrowing base, maintaining a 1.59x Leverage Ratio - Total liquidity at September 30, 2024, was $208.0 million, a 7% increase from June 30, 2024[19] - Outstanding borrowings on the credit facility were $392 million, with a current borrowing base of $600 million[19] - Ring paid down $15 million in borrowings during Q3 2024[19] - The Leverage Ratio remained at 1.59x as of September 30, 2024[2] 2024 Guidance and Outlook This section outlines Ring Energy's updated full year and Q4 2024 guidance, including projected sales volumes, capital expenditures, operating expenses, and the strategic allocation of its capital program Full Year 2024 Guidance Ring Energy updated its full year 2024 guidance, maintaining capital spending at the midpoint for drilling and infrastructure, slightly reducing oil sales volume due to divestiture, and aiming to fund capital expenditures with cash and operations, targeting excess free cash flow for debt reduction - Full year 2024 total capital spending is now expected to be $147 million to $155 million (midpoint $151 million), with no change to the midpoint from previous guidance[25][32] - The program includes drilling, completing, and placing on production 21 to 23 horizontal and 22 to 24 vertical wells[25][32] - Full year 2024 oil sales volumes guidance is updated to 13,250 to 13,450 Bo/d, reflecting a 1% reduction at the midpoint primarily due to the non-core asset divestiture[27][32] - All 2024 planned capital expenditures will be fully funded by cash on hand and cash from operations, with excess Adjusted Free Cash Flow targeted for further debt reduction[27] - Full year LOE guidance is $10.70 to $11.00 per Boe[30][32] Fourth Quarter 2024 Guidance Q4 2024 guidance projects sales volumes of 19,200 to 20,000 Boe/d (68% oil), capital expenditures between $33 million and $41 million for drilling and completion, and LOE of $10.75 to $11.25 per Boe Q4 2024 Sales Volumes, Capital Program, and Operating Expenses Guidance | Metric | Q4 2024 Guidance | |:---|:---|\n| Total Oil (Bo/d) | 12,950 - 13,550 | | Total (Boe/d) | 19,200 - 20,000 | | Oil (%) | 68% | | Capital spending (millions) | $33 - $41 | | New Hz wells drilled | 4 - 6 | | New Vertical wells drilled | 4 - 6 | | Wells completed and online | 10 - 14 | | LOE (per Boe) | $10.75 - $11.25 | - Q4 2024 sales volumes are guided at 12,950 to 13,550 Bo/d and 19,200 to 20,000 Boe/d (68% oil, 13% natural gas, and 19% NGLs)[28][32] - Targeted capital expenditures for Q4 2024 are $33 million to $41 million, primarily for drilling and completion activities[29][32] Capital Program Allocation Based on the $151 million midpoint of 2024 spending, Ring Energy allocates 77% to drilling and infrastructure, 14% to recompletions, 5% to ESG improvements, and 4% to land and other capital - The 2024 capital spending program is designed with flexibility to respond to changes in commodity prices and market conditions[26] Estimated 2024 Capital Allocation (based on $151MM midpoint) | Allocation Category | Percentage | |:---|:---|\n| Drilling, completion, and related infrastructure | 77% | | Recompletions and capital workovers | 14% | | ESG improvements (environmental and emission reducing upgrades) | 5% | | Land, non-operated capital, and other | 4% | Company Information This section provides essential company information, including conference call details, an overview of Ring Energy, a safe harbor statement for forward-looking information, and investor contact details Conference Call Details Ring Energy will host a conference call on November 7, 2024, to discuss Q3 2024 results, with an updated investor presentation available online prior to the call - Conference call to discuss Q3 2024 results scheduled for Thursday, November 7, 2024, at 12:00 p.m. ET (11 a.m. CT)[33] - An updated investor presentation will be posted to the Company's website prior to the call, and an audio replay will be available online[33][34] About Ring Energy, Inc. Ring Energy, Inc. is an oil and gas exploration, development, and production company focused on its Permian Basin assets - Ring Energy, Inc. is an oil and gas exploration, development, and production company[35] - Current operations are focused on the development of its Permian Basin assets[35] Safe Harbor Statement This section provides a standard disclaimer for forward-looking statements, outlining inherent risks and uncertainties related to future expectations, and disclaims any obligation to update them - The release contains forward-looking statements regarding the Company's strategy, prospects, future reserves, production, financial position, business strategy, revenues, earnings, costs, capital expenditures, and debt levels[36] - These statements involve wide variety of risks and uncertainties, including declines in commodity prices, success in exploration, adverse weather, timing of expenditures, inaccuracies of reserve estimates, impacts to financial statements from impairment write-downs, and risks related to indebtedness[36][37] - Ring undertakes no obligation to revise or update publicly any forward-looking statements, except as required by law[37] Contact Information Investor relations contact information is provided through Al Petrie Advisors - Investor relations contact: Al Petrie, Senior Partner at Al Petrie Advisors, Phone: 281-975-2146, Email: apetrie@ringenergy.com[38] Financial Statements (Unaudited) This section presents Ring Energy's unaudited condensed financial statements, including statements of operations, operating data, balance sheets, and cash flows for Q3 2024 and comparative periods Condensed Statements of Operations Condensed statements of operations show $33.9 million net income for Q3 2024, a significant increase from Q2 2024 and a turnaround from Q3 2023, despite decreased revenues, with stable QoQ but increased YoY operating expenses Condensed Statements of Operations (Q3 2024 vs. Q2 2024 & Q3 2023) | Metric | Q3 2024 | Q2 2024 | Q3 2023 | |:---|:---|:---|:---|\n| Oil, Natural Gas, and Natural Gas Liquids Revenues | $89,244,383 | $99,139,349 | $93,681,798 | | Total Costs and Operating Expenses | $59,399,091 | $57,321,415 | $54,108,273 | | Income from Operations | $29,845,292 | $41,817,934 | $39,573,525 | | Net Other Income (Expense) | $14,121,086 | $(12,578,455) | $(50,524,083) | | Income Before Benefit from (Provision for) Income Taxes | $43,966,378 | $29,239,479 | $(10,950,558) | | Benefit from (Provision for) Income Taxes | $(10,087,954) | $(6,820,485) | $3,411,336 | | Net Income (Loss) | $33,878,424 | $22,418,994 | $(7,539,222) | | Basic Earnings (Loss) per Share | $0.17 | N/A | $(0.04) | | Diluted Earnings (Loss) per Share | $0.17 | N/A | $(0.04) | Condensed Operating Data Condensed operating data details record total Boe sales volumes for Q3 2024, alongside average daily sales, realized prices, and costs per Boe, highlighting a decline in realized prices across all products Condensed Operating Data (Q3 2024 vs. Q2 2024 & Q3 2023) | Metric | Q3 2024 | Q2 2024 | Q3 2023 | |:---|:---|:---|:---|\n| Net sales volumes: Oil (Bbls) | 1,214,788 | 1,239,731 | 1,106,531 | | Net sales volumes: Natural gas (Mcf) | 1,705,027 | 1,538,347 | 1,567,104 | | Net sales volumes: Natural gas liquids (Bbls) | 350,975 | 304,448 | 243,142 | | Total oil, natural gas and natural gas liquids (Boe) | 1,849,934 | 1,800,570 | 1,610,857 | | Average daily equivalent sales (Boe/d) | 20,108 | 19,786 | 17,509 | | Average realized sales prices: Oil ($/Bbl) | $74.43 | $80.09 | $81.69 | | Average realized sales prices: Natural gas ($/Mcf) | $(2.26) | $(1.93) | $0.36 | | Average realized sales prices: Natural gas liquids ($/Bbls) | $7.66 | $9.27 | $11.22 | | Barrel of oil equivalent ($/Boe) | $48.24 | $55.06 | $58.16 | | Average costs and expenses per Boe: Lease operating expenses | $10.98 | $10.72 | $11.18 | | Average costs and expenses per Boe: General and administrative expense | $3.47 | $4.28 | $4.40 | Condensed Balance Sheets The condensed balance sheet shows a slight increase in total assets and a decrease in total liabilities from December 31, 2023, to September 30, 2024, leading to a notable increase in total stockholders' equity driven by retained earnings Condensed Balance Sheet (September 30, 2024 vs. December 31, 2023) | Metric | September 30, 2024 | December 31, 2023 | |:---|:---|:---|\n| Total Current Assets | $52,819,112 | $55,910,819 | | Net Properties and Equipment | $1,326,747,039 | $1,293,420,786 | | Total Assets | $1,399,765,010 | $1,376,496,392 | | Total Current Liabilities | $97,591,993 | $113,808,266 | | Revolving line of credit | $392,000,000 | $425,000,000 | | Total Liabilities | $548,454,867 | $589,913,492 | | Total Stockholders' Equity | $851,310,143 | $786,582,900 | - Cash and cash equivalents were $0 at September 30, 2024, down from $296,384 at December 31, 2023[43] - Retained earnings significantly improved to $52,364,183 at September 30, 2024, from an accumulated deficit of $(9,448,612) at December 31, 2023[43] Condensed Statements of Cash Flows Condensed statements of cash flows show strong net cash from operating activities in Q3 2024, significantly decreased net cash used in investing activities YoY, and increased net cash used in financing activities QoQ due to higher credit facility payments Condensed Statements of Cash Flows (Q3 2024 vs. Q2 2024 & Q3 2023) | Metric | Q3 2024 | Q2 2024 | Q3 2023 | |:---|:---|:---|:---|\n| Net Cash Provided by Operating Activities | $51,336,932 | $50,617,930 | $55,390,975 | | Net Cash Used in Investing Activities | $(36,798,293) | $(36,862,165) | $(87,329,713) | | Net Cash Provided by (Used in) Financing Activities | $(15,717,451) | $(13,953,028) | $30,327,344 | | Net Increase (Decrease) in Cash | $(1,178,812) | $(197,263) | $(1,611,394) | | Cash at End of Period | $0 | $1,178,812 | $138,581 | - Proceeds from sale of CBP vertical wells contributed $5,500,000 to investing activities in Q3 2024[45] - Payments on revolving line of credit were $42,000,000 in Q3 2024, contributing to net cash used in financing activities[45] Financial Commodity Derivative Positions As of September 30, 2024, Ring Energy held various oil and natural gas derivative contracts, including swaps, deferred premium puts, and two-way collars, extending through Q3 2026, with detailed hedged volumes and weighted average prices Oil Hedges (WTI) as of September 30, 2024 | Type | Q4 2024 Hedged Volume (Bbl) | Q4 2024 Weighted Average Price | Q1 2025 Hedged Volume (Bbl) | Q1 2025 Weighted Average Price | |:---|:---|:---|:---|:---|\n| Swaps | 368,000 | $68.43 | 71,897 | $72.03 | | Deferred premium puts | 88,405 | $75.00 (strike) | — | — | | Two-way collars | 128,800 | $60.00 (put), $73.24 (call) | 474,750 | $57.06 (put), $75.82 (call) | Natural Gas Hedges (NYMEX) as of September 30, 2024 | Type | Q4 2024 Hedged Volume (MMBtu) | Q4 2024 Weighted Average Price | Q1 2025 Hedged Volume (MMBtu) | Q1 2025 Weighted Average Price | |:---|:---|:---|:---|:---|\n| NYMEX Swaps | 431,800 | $4.44 | 616,199 | $3.78 | | Two-way collars | 18,300 | $3.00 (put), $4.15 (call) | 33,401 | $3.00 (put), $4.39 (call) | Oil Hedges (basis differential) as of September 30, 2024 | Type | Q4 2024 Hedged Volume (Bbl) | Q4 2024 Weighted Average Spread Price | Q1 2025 Hedged Volume (Bbl) | Q1 2025 Weighted Average Spread Price | |:---|:---|:---|:---|:---|\n| Argus basis swaps | 244,000 | $1.15 | 270,000 | $1.00 | Non-GAAP Financial Information & Reconciliations This section provides reconciliations and definitions for key non-GAAP financial measures, including Adjusted Net Income, Adjusted EBITDA, Adjusted Free Cash Flow, Adjusted Cash Flow from Operations, G&A excluding share-based compensation, Leverage Ratio, All-In Cash Operating Costs, and Cash Operating Margin Adjusted Net Income Adjusted Net Income, a non-GAAP measure, was $13.4 million or $0.07 per diluted share in Q3 2024, reflecting adjustments for non-recurring or non-cash items, and decreased from prior periods - Adjusted Net Income is a non-GAAP measure used by management to assess ongoing operating and financial performance, excluding estimated after-tax impact of share-based compensation, ceiling test impairment, unrealized derivative gains/losses, and transaction costs[50][51] Reconciliation of Net Income (Loss) to Adjusted Net Income | Metric | Q3 2024 | Q2 2024 | Q3 2023 | |:---|:---|:---|:---|\n| Net Income (Loss) | $33,878,424 | $22,418,994 | $(7,539,222) | | Share-based compensation | $32,087 | $2,077,778 | $2,170,735 | | Unrealized loss (gain) on change in fair value of derivatives | $(26,614,390) | $(765,898) | $33,871,957 | | Transaction costs - executed A&D | — | — | $(157,641) | | Tax impact on adjusted items | $6,132,537 | $(304,225) | $(2,059,802) | | Adjusted Net Income | $13,428,658 | $23,426,649 | $26,286,027 | | Adjusted Net Income per Diluted Share | $0.07 | $0.12 | $0.13 | Adjusted EBITDA Adjusted EBITDA, a non-GAAP measure, was $54.0 million in Q3 2024, with a 61% margin, providing insight into operating performance by excluding non-cash and financing-related items, and decreased from prior periods - Adjusted EBITDA is defined as net income (loss) plus net interest expense, unrealized derivative gains/losses, income tax expense, DD&A, ARO accretion, transaction costs, share-based compensation, and loss/gain on asset disposal, backing out other income[54] Reconciliation of Net Income (Loss) to Adjusted EBITDA | Metric | Q3 2024 | Q2 2024 | Q3 2023 | |:---|:---|:---|:---|\n| Net Income (Loss) | $33,878,424 | $22,418,994 | $(7,539,222) | | Interest expense, net | $10,610,539 | $10,801,194 | $11,301,328 | | Unrealized loss (gain) on change in fair value of derivatives | $(26,614,390) | $(765,898) | $33,871,957 | | Income tax (benefit) expense | $10,087,954 | $6,820,485 | $(3,411,336) | | Depreciation, depletion and amortization | $25,662,123 | $24,699,421 | $21,989,034 | | Asset retirement obligation accretion | $354,195 | $352,184 | $354,175 | | Transaction costs - executed A&D | — | — | $(157,641) | | Share-based compensation | $32,087 | $2,077,778 | $2,170,735 | | Loss (gain) on disposal of assets | — | $(51,338) | — | | Other income | — | — | — | | Adjusted EBITDA | $54,010,932 | $66,352,820 | $58,579,030 | | Adjusted EBITDA Margin | 61% | 67% | 63% | Adjusted Free Cash Flow (AFCF) Adjusted Free Cash Flow, a non-GAAP measure, was $1.9 million in Q3 2024, a significant decrease from prior periods, primarily due to higher capital expenditures and lower adjusted operating cash flow - Adjusted Free Cash Flow (AFCF) is defined as Net Cash Provided by Operating Activities less changes in operating assets and liabilities, plus transaction costs, current income tax expense, proceeds from divestitures, loss/gain on asset disposal, and less capital expenditures, bad debt expense, and other income[57] Reconciliation of Net Cash Provided by Operating Activities to Adjusted Free Cash Flow | Metric | Q3 2024 | Q2 2024 | Q3 2023 | |:---|:---|:---|:---|\n| Net Cash Provided by Operating Activities | $51,336,932 | $50,617,930 | $55,390,975 | | Adjustments - Condensed Statements of Cash Flows: Changes in operating assets and liabilities | $(6,775,740) | $5,979,501 | $(6,843,290) | | Capital expenditures | $(42,691,163) | $(35,360,832) | $(42,398,484) | | Adjusted Free Cash Flow | $1,936,111 | $21,412,402 | $6,137,684 | Reconciliation of Adjusted EBITDA to Adjusted Free Cash Flow | Metric | Q3 2024 | Q2 2024 | Q3 2023 | |:---|:---|:---|:---|\n| Adjusted EBITDA | $54,010,932 | $66,352,820 | $58,579,030 | | Net interest expense (excluding amortization of deferred financing costs) | $(9,383,658) | $(9,579,586) | $(10,042,862) | | Capital expenditures | $(42,691,163) | $(35,360,832) | $(42,398,484) | | Adjusted Free Cash Flow | $1,936,111 | $21,412,402 | $6,137,684 | Adjusted Cash Flow from Operations (ACFFO) Adjusted Cash Flow from Operations, a non-GAAP measure, was $44.6 million in Q3 2024, derived from net cash provided by operating activities excluding changes in operating assets and liabilities, and decreased from prior periods - Adjusted Cash Flow from Operations (ACFFO) is defined as Net Cash Provided by Operating Activities less the changes in operating assets and liabilities[61] Reconciliation of Net Cash Provided by Operating Activities to Adjusted Cash Flow from Operations | Metric | Q3 2024 | Q2 2024 | Q3 2023 | |:---|:---|:---|:---|\n| Net Cash Provided by Operating Activities | $51,336,932 | $50,617,930 | $55,390,975 | | Changes in operating assets and liabilities | $(6,775,740) | $5,979,501 | $(6,843,290) | | Adjusted Cash Flow from Operations | $44,561,192 | $56,597,431 | $48,547,685 | G&A Excluding Share-Based Compensation and Transaction Costs G&A excluding share-based compensation and transaction costs, a non-GAAP measure, was $6.4 million in Q3 2024, providing a clearer view of core G&A expenses, increasing QoQ but decreasing YoY - This reconciliation presents G&A excluding share-based compensation and transaction costs for executed acquisitions and divestitures (A&D)[63] Reconciliation of G&A to G&A Excluding Share-Based Compensation and Transaction Costs | Metric | Q3 2024 | Q2 2024 | Q3 2023 | |:---|:---|:---|:---|\n| General and administrative expense (G&A) | $6,421,567 | $7,713,534 | $7,083,574 | | Shared-based compensation | $32,087 | $2,077,778 | $2,170,735 | | G&A excluding share-based compensation | $6,389,480 | $5,635,756 | $4,912,839 | | Transaction costs - executed A&D | — | — | $(157,641) | | G&A excluding share-based compensation and transaction costs | $6,389,480 | $5,635,756 | $5,070,480 | Leverage Ratio The Leverage Ratio, calculated under the senior revolving credit facility, was 1.59x as of September 30, 2024, well below the 3.00x maximum, indicating healthy financial leverage - The Leverage Ratio is calculated as consolidated total debt to Consolidated EBITDAX for the four consecutive fiscal quarters[66] - Consolidated EBITDAX is defined in accordance with the senior revolving credit facility, including adjustments for acquisitions and dispositions on a pro forma basis[67] Leverage Ratio Calculation (as of September 30, 2024) | Metric | Value | |:---|:---|\n| Revolving line of credit | $392,000,000 | | Pro Forma Consolidated EBITDAX (Last Four Quarters) | $246,458,656 | | Leverage Ratio | 1.59 | | Maximum Allowed | ≤ 3.00x | All-In Cash Operating Costs All-In Cash Operating Costs, a non-GAAP measure, totaled $42.7 million or $23.10 per Boe in Q3 2024, providing a comprehensive view of cash operating expenses, increasing QoQ but decreasing YoY per Boe - All-In Cash Operating Costs include lease operating expenses, G&A excluding share-based compensation, net interest expense (excluding amortization of deferred financing costs), operating lease expense, production taxes, ad valorem taxes, and gathering/transportation costs[71] All-In Cash Operating Costs (Q3 2024 vs. Q2 2024 & Q3 2023) | Metric | Q3 2024 | Q2 2024 | Q3 2023 | |:---|:---|:---|:---|\n| Lease operating expenses (including workovers) | $20,315,282 | $19,309,017 | $18,015,348 | | G&A excluding share-based compensation | $6,389,480 | $5,635,756 | $4,912,839 | | Net interest expense (excluding amortization of deferred financing costs) | $9,383,658 | $9,579,586 | $10,042,862 | | Oil and natural gas production taxes | $4,203,851 | $3,627,264 | $4,753,289 | | Ad valorem taxes | $2,164,562 | $1,337,276 | $1,779,163 | | Gathering, transportation and processing costs | $102,420 | $107,629 | $(4,530) | | All-in cash operating costs | $42,734,344 | $39,771,618 | $39,637,191 | | Boe | 1,849,934 | 1,800,570 | 1,610,857 | | All-in cash operating costs per Boe | $23.10 | $22.09 | $24.61 | Cash Operating Margin Cash Operating Margin, a non-GAAP measure, was $25.14 per Boe in Q3 2024, representing realized revenues less all-in cash operating costs, and decreased from prior periods primarily due to lower realized revenues - Cash Operating Margin is defined as realized revenues per Boe less 'all-in cash operating costs per Boe'[73] Cash Operating Margin per Boe (Q3 2024 vs. Q2 2024 & Q3 2023) | Metric | Q3 2024 | Q2 2024 | Q3 2023 | |:---|:---|:---|:---|\n| Realized revenues per Boe | $48.24 | $55.06 | $58.16 | | All-in cash operating costs per Boe | $23.10 | $22.09 | $24.61 | | Cash Operating Margin per Boe | $25.14 | $32.97 | $33.55 |