Ring Energy(US:REI)2025-07-15 16:00Summary of Ring Energy Fireside Chat - July 15, 2025 Company Overview - Company: Ring Energy (REI) - Industry: Oil and Gas Exploration and Production - Key Assets: Concentrated in the Permian Basin, specifically the Central Basin Platform Key Points and Arguments 1. Acquisition Details: Ring Energy completed a $100 million acquisition of assets from Lime Rock Resources on March 31, 2025, enhancing its position in the Central Basin Platform [3] 2. Production Metrics: - Q1 2025 total production averaged 18,400 BOEs per day, with 12,100 barrels per day of oil - Projected Q2 2025 production is about 21,500 BOEs per day, and for the second half of 2025, it is expected to be around 20,000 BOEs per day [3] 3. Operational Synergies: The acquisition allows for operational efficiencies due to the proximity and similarity of the new assets to existing ones, leading to lower operating costs [4][5] 4. Production Profile: The acquired assets have a lower decline rate (13.5%) compared to Ring's overall decline rate (22%), which is beneficial for maintaining production levels and reducing capital expenditures [6][40] 5. Development Locations: The acquisition added approximately 40 gross development locations, which are competitive within Ring's existing portfolio [9][10] 6. Cost Synergies: Integration of operations has led to immediate cost savings, including the reduction of lease operators and workover rigs, and improved marketing agreements resulting in an additional $0.80 per barrel [12][14][15] 7. Water Handling Capabilities: The acquisition enhances water handling capabilities, crucial for drilling and produced water management in the Permian Basin [17][20] 8. Debt Reduction Strategy: Ring Energy is prioritizing debt reduction, with plans to pay off the Lime Rock acquisition within three to four quarters, even in a lower oil price environment [35][51] 9. Market Conditions: The current acquisition market is characterized by uncertainty, with sellers reluctant to sell at lower oil prices, impacting potential acquisition opportunities [64][65] 10. Future Outlook: The company is focused on maintaining flexibility in its operations to adapt to market volatility, with a long-term goal of reducing leverage and potentially introducing dividends in the future [73][74] Additional Important Insights - Credit Facility: Ring reaffirmed a credit facility borrowing base of $585 million, extended to June 2029, with a reduced pricing margin, indicating improved financial terms [53][56] - Organic Growth: While the focus has shifted towards debt reduction, the company remains interested in organic growth opportunities that offer high rates of return [68][70] - Market Positioning: The management emphasizes the importance of a strong balance sheet to withstand price volatility and maintain operational flexibility [49][51] This summary encapsulates the key discussions and insights from the Ring Energy fireside chat, highlighting the company's strategic focus on operational efficiency, debt reduction, and adaptability in a volatile market environment.