Ring Energy(US:REI)2025-12-09 17:02Summary of Ring Energy Conference Call - December 09, 2025 Company Overview - Company: Ring Energy (NYSEAM:REI) - Industry: Exploration and Production in the Oil and Gas sector - Key Assets: Concentrated in conventional plays in the Permian Basin - Recent Acquisition: $100 million acquisition of assets in Andrews County from Limerock Resources [3][4] Core Financial Performance - Production: - Q3 2025 average production: 20,789 BOE per day, with 64% being oil [3] - Oil production percentage decreased from 68% in Q2 2025 to 64% in Q3 2025, with a forecast of 66% for Q4 2025 [6][8] - Cash Flow: Generated $13.9 million of adjusted free cash flow in Q3 2025 [3] - Debt Reduction: - Reduced outstanding borrowings by $20 million in Q3 2025 - Total long-term debt repayment of approximately $32 million since the Limerock acquisition [3][26] Operational Insights - Performance of Limerock Assets: Exceeded production forecasts by nearly 15% in April 2025, with ongoing strong performance [4] - Cost Management: - Lease operating expenses averaged $10.73 per BOE, below guidance of $11 per BOE [9] - Initiatives to reduce costs include optimizing chemical usage and reducing operator numbers by 50% in certain areas [9][11] - Production Efficiency: Seasonal issues and gas gathering system efficiency impacted production mix percentages [6][7] Capital Allocation and Future Plans - 2026 Capital Plans: - Focus on capital-efficient projects, with a base case oil price assumption of $60 WTI [22][23] - Plans to allocate capital to drilling more horizontal wells, including longer lateral sections [34][35] - Break-even Costs: Competitive break-even costs expected to decrease due to lower service costs [15][16] - Debt Management: Prioritizing debt repayment over capital spending in a lower oil price environment [31] Strategic Outlook - Market Positioning: - Positioned to withstand potential lower oil prices due to lower decline rates and high operating margins [41] - Focus on building a larger inventory of low break-even drilling opportunities for future growth [42] - Long-term Vision: Aiming for significant organic growth when oil prices recover, with a strong emphasis on reducing debt and enhancing liquidity [41][42] Additional Insights - Inventory Growth: Current inventory includes over 210 proved undeveloped locations and 220 workover opportunities [32] - Technological Advancements: Emphasis on modern drilling and completion technologies to improve capital efficiency [36][37] This summary encapsulates the key points discussed during the Ring Energy conference call, highlighting the company's financial performance, operational strategies, capital allocation plans, and future outlook in the oil and gas industry.