Ring Energy (REI) Conference Transcript

Summary of Ring Energy (REI) Conference Call - August 18, 2025 Company Overview - Company Name: Ring Energy - Headquarters: The Woodlands, Texas - Industry: Independent oil and gas - Focus Area: Permian Basin, specifically the Southern part of the Northwest Shelf and the Central Basin Platform [6][7] Key Financial Metrics - Average Production: Over 21,000 barrels per day, with approximately 14,500 barrels per day being crude oil [9][21] - Approved Reserves: 134 million barrels valued at approximately $1.5 billion at SEC prices, with an additional 12 million barrels added from the Limerick acquisition [7] - Record Adjusted Free Cash Flow: Nearly $25 million, an increase of over 300% [11][31] - Operating Costs: Lease operating costs reduced by 12%, and all-in cash operating costs also dropped by 12% [10][31] - Leverage Ratio: Improved by 50% since the company’s leadership change, currently at around two times [15][40] Strategic Focus - Long-term Strategy: Focused on maximizing free cash flow through operational excellence and cost reduction [12][40] - Technological Application: Utilizing technologies developed for shales on conventional rock, leading to significant returns [8] - Debt Reduction: Prioritizing debt repayment in the current price environment, aiming for a leverage ratio below one times [15][41] Operational Highlights - Production Growth: Increased production by over 23% compounded annually since 2020 [13] - Reserve Growth: Proved reserves increased by 88%, including the effects of selling non-core assets [13] - Acquisition Strategy: Successful integration of LimeRock assets, leading to a 13% increase in production per share and a 250% increase in adjusted free cash flow [31][30] Market Position and Comparisons - Peer Comparison: Second lowest decline rate in a peer group of 11 companies, with the longest reserve life at 18.7 years [17][18] - Operating Margins: Ranked third in terms of highest operating margins among peers, allowing resilience against oil price volatility [20] - Valuation Perspective: Current stock price undervalued compared to recent transactions in the Central Basin Platform, suggesting a potential trading value of $2.51 per share [37] Future Outlook - Guidance for Production: Anticipated production of 14,200 barrels of oil per day, with a focus on maintaining operational efficiency [21][22] - Capital Spending: Planned capital spending of $97 million for the year, a reduction of 36% from previous guidance [27][25] - Price Sensitivity: Adjusted free cash flow projections based on oil prices ranging from $55 to $75 per barrel, indicating strong cash flow generation potential [28][29] Conclusion - Company Resilience: Ring Energy is positioned as a strong and resilient company, focusing on operational efficiency, debt reduction, and maximizing shareholder value in a volatile market environment [16][40]