Ring Energy(US:REI)2021-03-17 18:22Financial Data and Key Metrics Changes - In Q4 2020, the company reported sales volumes of 9,307 barrels of oil equivalent per day, exceeding guidance, with 86% being oil [8] - Adjusted EBITDA for Q4 2020 was $25 million, contributing to $13 million of free cash flow, marking the fifth consecutive quarter of free cash flow [9] - For the full year 2020, revenues were $113 million, with a net loss of $253.4 million or a loss per diluted share of $3.48 [17][18] - The company ended Q4 2020 with $41 million in liquidity, a 25% increase from Q3 2020 [9] Business Line Data and Key Metrics Changes - The company performed 8 CTRs in Q4 2020, converting wells to rod pumps, which reduced future operating costs [8] - The average lifting cost for 2020 was $10.52 per BOE, an 8% decrease year-over-year [11] - The company plans to drill 6 to 8 wells and complete 8 to 10 wells in 2021, with capital spending targeted at $44 million to $48 million [23] Market Data and Key Metrics Changes - Year-end 2020 proved reserves were reported at 76.5 million barrels of oil equivalent, down from 81.1 million barrels at the end of 2019 [12] - The PV10 of year-end 2020 SEC proved reserves was $556 million, down 40% from $923 million at the end of 2019 due to lower prices [12] Company Strategy and Development Direction - The company is focused on generating free cash flow, improving margins, and reducing debt through disciplined capital allocation [29][34] - A strategic objective includes pursuing operational excellence and investing in high-return projects [33] - The company plans to divest noncore assets, including Delaware Basin assets, to strengthen its balance sheet [34] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the impact of a severe winter storm on production but remains optimistic about generating free cash flow for a sixth consecutive quarter [27][28] - The company is committed to a strategic vision focused on health, safety, environmental excellence, and financial sustainability [29] - Management expressed confidence in a better year for 2021, with expectations for production growth and improved financial performance [13][22] Other Important Information - The company plans to file a 10-K/A to correct a typo regarding earnings per share [15] - The company relocated its headquarters to reduce costs and improve communication [32] Q&A Session Summary Question: Regarding the Delaware Basin asset sale - Management believes 2021 is a better year for asset sales compared to 2020, with expectations for good value due to improved prices and stabilized production [40][41] Question: Insights on M&A strategy - Management indicated a preference for using equity in M&A transactions to strengthen the balance sheet and focus on high-margin, low-breakeven cost assets [42][44] Question: Details on the 2021 drilling program - Management confirmed that the drilling program may accelerate due to higher product prices, with potential drilling starting in Q2 2021 [48] Question: Production history and well economics - Management provided insights on the benefits of 1.5-mile laterals, indicating they have demonstrated better economics compared to 1-mile laterals [52][56] Question: Focus on balance sheet and debt reduction - Management aims for a debt-to-EBITDA ratio of 1x or below, with plans to utilize excess cash for debt reduction while considering growth opportunities [61][62]