Ring Energy(US:REI)2020-11-10 22:32Financial 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]