Ring Energy: Lowered Free Cash Flow Expectations Despite Strong Q1 Sales Volumes

Core Viewpoint - Ring Energy, Inc. reported a positive Q1 2024 with sales volumes exceeding guidance, driven by higher oil production and lower operating expenses, despite challenges in natural gas pricing [2][10]. Sales and Production - Ring sold 19,034 BOEPD in Q1 2024, which was 3% above the high-end of its guidance [2] - The oil cut was 70%, resulting in 13,394 barrels per day in oil sales, 5% above expectations [2] - The company experienced less downtime than anticipated, contributing to higher volumes [2] Financial Performance - Total revenue for Q1 2024 was $366 million, with oil sales generating $363 million at $75.50 per barrel [4] - Natural gas revenues were negative $0.8 million, but NGLs contributed $3 million, leading to a realized price of $4.29 per BOE for combined NGLs and natural gas [3][4] - Lease operating expenses were $10.60 per BOE, lower than the guidance of $10.75 to $11.25 [2] Future Outlook - Projected sales volumes for 2024 have been increased to 18,700 BOEPD, with oil sales expected to be 13,150 barrels per day [8] - The company anticipates generating $366 million in revenue for 2024, with a projected free cash flow of $55 million [8][10] - Net debt is expected to reduce to around $370 million by the end of 2024, with leverage at 1.5x [8][9] Valuation - The estimated value of Ring is now $2.50 per share, reflecting reduced free cash flow expectations and leverage risks [5][9] - The valuation could increase if sales volumes exceed expectations or if leverage is reduced [9][10]