Ring Energy(REI)2025-05-07 21:09Financial 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].