Ring Energy(REI)2025-05-08 17:02Financial Data and Key Metrics Changes - The company reported a net income of $9.1 million or $0.05 per diluted share for Q1 2025, compared to $5.7 million or $0.03 per diluted share in Q4 2024 [19] - Adjusted EBITDA for Q1 2025 was $46.4 million, down from $50.9 million in Q4 2024, primarily due to lower oil revenue [20] - Revenue for Q1 2025 was $79.1 million, with oil accounting for 97% of total revenue, while total sales volumes were 18,392 BOE per day, exceeding guidance [17][14] Business Line Data and Key Metrics Changes - The company sold 12,074 barrels of oil per day, exceeding the high end of guidance despite weather-related downtime [9] - Seven wells were drilled, completed, and placed on production in Q1 2025, with production from these assets averaging over 2,500 BOE per day in April, representing a 9% increase over initial estimates [10][11] - The acquisition of LimeRock CVP assets added over 40 gross drilling locations to the existing inventory, enhancing production metrics [10] Market Data and Key Metrics Changes - The overall realized price increased by 4% to $47.78 per BOE in Q1 2025 from $46.14 per BOE in Q4 2024 [15] - The average crude oil differential from NYMEX WTI futures pricing improved to negative $0.89 per barrel in Q1 2025 from negative $1.42 per barrel in Q4 2024 [16] - The company anticipates a modest reduction in production during the last half of the year, guiding to approximately 2% annual production growth over 2024 [12] Company Strategy and Development Direction - The company emphasizes a value-focused strategy aimed at maximizing cash flow generation and maintaining production levels in low price environments [25][26] - Capital spending for 2025 is expected to be reduced by more than 47%, with a focus on debt reduction and maintaining financial flexibility [12][23] - The company is actively pursuing organic growth opportunities in the Central Basin Platform while remaining selective in acquisitions [61][62] Management's Comments on Operating Environment and Future Outlook - Management noted the high level of oil price volatility and emphasized the importance of maintaining a strong financial position to navigate these challenges [25][28] - The company plans to allocate more cash flow to debt reduction rather than increasing capital spending, even if oil prices recover [27][28] - Management expressed confidence in the production outperformance from new wells and the benefits of the LimeRock acquisition to support future growth [12][28] Other Important Information - The company ended the period with $460 million drawn on its credit facility, with a leverage ratio of 1.9 times [20] - The company has approximately 1.7 million barrels of oil hedged for the last nine months of 2025, providing downside protection at an average price of $64.44 [21] - The company is focusing on acquiring and leasing opportunities in the Central Basin Platform to expand its inventory life [75] Q&A Session Summary Question: Does the company have a leverage target in mind for debt reduction? - Management stated the long-term goal for the leverage ratio is to be comfortably below one, emphasizing the importance of reducing debt in a low price environment [30][32] Question: Will cost improvements affect the capital spending guidance? - Management confirmed that current capital spending forecasts include current prices, and any cost reductions would be directed towards debt repayment rather than increasing project numbers [34][38] Question: What is the state of activity in the Central Basin Platform? - Management noted a mix of interest in the Central Basin Platform, with some larger operators entering the market, while the company remains focused on acquiring undervalued assets [56][60]