Ring Energy(US:REI)2025-11-07 17:00Financial Data and Key Metrics Changes - The company reported oil sales of 13,332 barrels per day, slightly below the midpoint of guidance, while total sales were 20,789 barrels of oil equivalent per day, exceeding the midpoint of guidance [5][6] - Adjusted free cash flow for the quarter was $13.9 million, down from $24.8 million in the previous quarter, primarily due to higher capital spending and lower EBITDA [8][14] - The net loss for Q3 was $51.6 million or $0.25 per diluted share, including $72.9 million in non-cash impairment charges, compared to a net income of $20.6 million or $0.10 per diluted share in Q2 [13] Business Line Data and Key Metrics Changes - Lifting costs were reported at $10.73 per BOE, below the low end of guidance for the second consecutive quarter [7][11] - The company achieved a reduction in debt by $20 million during the quarter, exceeding guidance by $2 million [8][14] Market Data and Key Metrics Changes - Realized pricing for the third quarter decreased by 4% to $41.10 per BOE, driven by a 16% reduction in NGL prices [10] - The average realized oil price increased by 3% to $64.32, while realized gas prices remained negative but improved from the previous quarter [10][11] Company Strategy and Development Direction - The company focuses on maximizing adjusted free cash flow and reducing debt, with a disciplined approach to capital spending [5][8] - There is an emphasis on organic growth through reserves and inventory growth rather than acquisitions, especially in a challenging price environment [19][64] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's operational performance despite weak commodity prices and indicated a commitment to maintaining capital discipline [5][8] - The company plans to continue prioritizing debt reduction and improving leverage ratios, with expectations of potential growth when commodity prices recover [17][19] Other Important Information - The company updated its production guidance for the full year to 13,100-13,500 barrels of oil per day and 19,800-20,400 BOE per day [15] - The company is exploring opportunities for non-core divestitures to further reduce debt [18][41] Q&A Session Summary Question: Thoughts on terming out the revolver in the current interest rate environment - Management indicated that all options are on the table for strengthening the balance sheet, including evaluating the credit facility [24][25] Question: Expectations for service costs in the upcoming year - Management noted that service costs remain under pressure, and while they hope for stability, the situation is uncertain [29][30] Question: Positioning of Ring Energy's stock relative to peers - Management believes the stock is undervalued compared to peers and expects gradual improvement in stock performance [34][36] Question: Scenarios for further debt reduction in 2026 - Management projected a potential debt reduction of around $10 million in Q4, with uncertainties affecting the final amount [38][39] Question: Clarification on the $10 million deferred payment related to Lime Rock - Management confirmed that the deferred payment impacts the overall debt reduction strategy, emphasizing the focus on paying down debt [40][41] Question: Organic growth opportunities with existing assets - Management highlighted the potential for organic growth through developing existing reserves and inventory, particularly in the Central Basin Platform and Northwest Shelf [63][64]