Ring Energy(US:REI)2025-08-07 16:00Financial Data and Key Metrics Changes - The company achieved record adjusted free cash flow of $24.8 million, marking the twenty-third consecutive quarter of generating free cash flow [12][21] - Net income for Q2 2025 was $20.6 million or $0.10 per diluted share, compared to $9.1 million or $0.05 per diluted share in Q1 2025 [20] - Adjusted EBITDA increased to $51.5 million from $46.4 million in the previous quarter, primarily due to higher oil revenue and lower G&A expenses [21] Business Line Data and Key Metrics Changes - The company sold 14,511 barrels of oil per day, near the high end of guidance, and 21,295 barrels of oil equivalent per day, just below the midpoint of guidance [12][16] - Lease operating expenses (LOE) were $10.45 per BOE, significantly lower than the guidance range of $11.5 to $12.5 per BOE [19] - Capital expenditures were $16.8 million, 48% lower than the first quarter [21] Market Data and Key Metrics Changes - The overall realized price decreased by 11% to $42.63 per BOE from $47.78 in Q1 2025, driven by a lower realized oil price of $62.69 [17] - NGL prices decreased by 36% to $6.19, while the average natural gas price differential from NYMEX futures pricing was negative $4.67 per Mcf [17] Company Strategy and Development Direction - The company is prioritizing debt reduction in the current lower price environment, with a focus on maintaining capital discipline [26] - The management team is exploring opportunities in other emerging plays, such as the Barnett, while continuing to focus on the San Andres horizontal wells [72][78] - The integration of LimeRock assets has led to significant operational efficiencies and cost reductions, which are expected to continue [8][46] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to manage operations effectively despite external challenges, emphasizing a strong operational performance [25] - The company anticipates that higher oil prices in the future will allow for increased capital allocation towards testing new intervals [78] Other Important Information - The company entered into an amended credit agreement with a $585 million borrowing base, providing a 34-month extension and improved terms [15][16] - The company has approximately 1.3 million barrels of oil hedged with an average downside protection price of $64.87, covering about 55% of oil sales guidance [22] Q&A Session Summary Question: Thoughts on stock performance relative to peers - Management noted that stock performance is influenced by various factors, including debt levels and company size, which may affect market perception [29][31] Question: Allocation of free cash flow from LimeRock acquisition - Management indicated plans to use free cash flow from LimeRock to reduce leverage while maintaining production levels [43][45] Question: Impact of midstream developments on gas price realizations - Management acknowledged that while there are ongoing midstream developments, infrastructure limitations will continue to affect price differentials in the near term [83]