Ring Energy Announces Financial and Operating Results for First Quarter 2017
Ring Energy Inc. (NYSE MKT: REI) (“Ring”)(“Company”) announced today financial results for the first quarter ended March 31, 2017. For the three month period ended March 31, 2017, Ring had oil and gas revenues of $12,243,793 compared to $6,092,388 for the quarter ended March 31, 2016, and net income of $1,696,141, or $0.03 per diluted share, compared to a net loss of $15,275,044, or $0.50 per diluted share, which included a pre-tax non-cash impairment of $21,412,086 for the same period in 2016. Excluding the after tax impact of the impairment, the net loss per diluted share for the three month period ended March 31, 2016 would have been $0.06.
For the three months ended March 31, 2017, oil sales volume increased to 240,260 barrels, compared to 191,377 barrels for the same period in 2016, an 26% increase, and gas sales volume decreased to 168,349 MCF (thousand cubic feet), compared to 256,748 MCF for the same period in 2016, a 34% decrease. On a barrel of oil equivalent (“BOE”) basis for the three months ended March 31, 2017, production sales increased to 268,318 BOEs, compared to 234,168 BOEs for the same period in 2016, a 15% increase. The average commodity prices received by Ring were $48.69 per barrel of oil and $3.25 per MCF of natural gas for the quarter ended March 31, 2017, compared to $29.20 per barrel of oil and $1.97 per MCF of natural gas for the quarter ended March 31, 2016.
Lease operating expenses, including production taxes, for the three months ended March 31, 2017 were $12.26 per BOE, a 3% increase from the prior year. Depreciation, depletion and amortization costs, including accretion, decreased 10% to $13.46 per BOE. General and administrative costs, which included a $991,210 charge for stock based compensation, were $10.59 per BOE, a 12% increase.
Cash provided by operating activities, before changes in working capital, for the three months ended March 31, 2017 was $7,221,936 or $0.14 per fully diluted share, compared to $1,254,315, or $0.04 per fully diluted share for the same period in 2016. Earnings before interest, taxes, depletion and other non-cash items (“Adjusted EBITDA”) for the three months ended March 31, 2017 was $7,105,257, or $0.14 per fully diluted share, compared to $1,666,936, or $0.05 per fully diluted share for the same period in 2016. (See accompanying table for a reconciliation of net income to adjusted EBITDA).
There was no outstanding debt on the Company’s $500 million senior secured credit facility at March 31, 2017.
Ring’s Chief Executive Officer, Mr. Kelly Hoffman, stated, “2017 is off to a fast start. With the promising initial results from the first 10 horizontal wells we drilled on our Central Basin Platform (“CBP”) property, our enthusiasm has only increased. Our staff has amassed a premier acreage portfolio in what is arguably one of the best locations in the country. With the acquisition of the 33,000 acres in Gaines County completed, we now have over 600 net potential drilling locations. We continue to look for opportunities that complement our core assets. We are excited and expect this year to be an extraordinary time for the Company.”
Non-GAAP Financial Measures:
Net income for the three months ended March 31, 2017 includes a non-cash charge for stock based compensation of $991,210. Excluding this item, the Company’s net income would have been $0.05 per diluted share for the three months ended March 31, 2017. The Company believes results excluding this item are more comparable to estimates provided by security analysts and, therefore, are useful in evaluating operational trends of the Company and its performance, compared to other similarly situated oil and gas producing companies.
About Ring Energy, Inc.
Ring Energy Inc. is an oil and gas exploration, development and production company with current operations in Texas and Kansas. www.ringenergy.com
Safe Harbor Statement
This release contains forward-looking statements within the meaning of the “safe-harbor” provisions of the Private Securities Litigation Reform Act of 1995 that involve a wide variety of risks and uncertainties, including, without limitations, statements with respect to the Company’s strategy and prospects. Such statements are subject to certain risks and uncertainties which are disclosed in the Company’s reports filed with the SEC, including its Form 10-K for the fiscal year ended December 31, 2016, its Form 10-Q for the quarter ended March 31, 2017 and its other filings with the SEC. Readers and investors are cautioned that the Company’s actual results may differ materially from those described in the forward-looking statements due to a number of factors, including, but not limited to, the Company’s ability to acquire productive oil and/or gas properties or to successfully drill and complete oil and/or gas wells on such properties, general economic conditions both domestically and abroad, and the conduct of business by the Company, and other factors that may be more fully described in additional documents set forth by the Company.
| RING ENERGY, INC. | |||||||||||
| STATEMENTS OF OPERATIONS | |||||||||||
| Three Months Ended | |||||||||||
| March 31, | |||||||||||
| 2017 | 2016 | ||||||||||
| (Unaudited) | (Unaudited) | ||||||||||
| Oil and Gas Revenues | $ | 12,243,793 | $ | 6,092,388 | |||||||
| Costs and Operating Expenses | |||||||||||
| Oil and gas production costs | 2,705,371 | 2,490,434 | |||||||||
| Oil and gas production taxes | 583,264 | 299,271 | |||||||||
| Depreciation, depletion and amortization | 3,474,019 | 3,394,627 | |||||||||
| Ceiling test impairment | - | 21,412,086 | |||||||||
| Asset retirement obligation accretion | 137,176 | 109,378 | |||||||||
| General and administrative expense | 2,841,111 | 2,220,072 | |||||||||
| Total Costs and Operating Expenses | 9,740,941 | 29,925,868 | |||||||||
| Gain (Loss) from Operations | 2,502,852 | (23,833,480 | ) | ||||||||
| Other Income (Loss) | |||||||||||
| Interest expense | - | (415,508 | ) | ||||||||
| Interest income | 116,679 | 2,887 | |||||||||
| Net Other Income (Loss) | 116,679 | (412,621 | ) | ||||||||
| Income (Loss) before tax provision | 2,619,531 | (24,246,101 | ) | ||||||||
| (Provision for) Benefit From Income Taxes | (1,340,250 | ) | 8,971,057 | ||||||||
| Net Income (Loss) | $ | 1,279,281 | ($15,275,044 | ) | |||||||
| Basic Income (Loss) Per Common Share | $ | 0.03 | ($0.50 | ) | |||||||
| Diluted Income (Loss) Per Common Share | $ | 0.03 | ($0.50 | ) | |||||||
| Basic Weighted-Average Common Shares Outstanding | 49,114,731 | 30,394,360 | |||||||||
| Diluted Weighted-Average Common Shares Outstanding | 50,414,435 | 30,394,360 | |||||||||
| COMPARATIVE OPERATING STATISTICS | |||||||||||||
| Three Months Ended March 31, | |||||||||||||
| 2017 | 2016 | Change | |||||||||||
| Net Production - BOE per day | 2,981 | 2,573 | 16 | % | |||||||||
| Per BOE: | |||||||||||||
| Average Sales Price | $ | 45.63 | $ | 26.02 | 75 | % | |||||||
| Lease Operating Expenses | 10.08 | 10.63 | -5 | % | |||||||||
| Production Taxes | 2.17 | 1.28 | 70 | % | |||||||||
| DD&A | 12.95 | 14.50 | -11 | % | |||||||||
| Accretion | 0.51 | 0.47 | -9 | % | |||||||||
| General & Administrative Expenses | 10.59 | 9.48 | 12 | % | |||||||||
| RING ENERGY, INC. | ||||||||||||||
| CONSOLIDATED BALANCE SHEET | ||||||||||||||
| March 31, | December 31, | |||||||||||||
| 2017 | 2016 | |||||||||||||
| ASSETS | ||||||||||||||
| Current Assets | ||||||||||||||
| Cash | $ | 55,418,128 | $ | 71,086,381 | ||||||||||
| Accounts receivable | 4,756,301 | 3,453,238 | ||||||||||||
| Joint interest billing receivable | 271,345 | 454,461 | ||||||||||||
| Prepaid expenses and retainers | 132,813 | 226,835 | ||||||||||||
| Total Current Assets | 60,578,587 | 75,220,915 | ||||||||||||
| Properties and Equipment | ||||||||||||||
| Oil and natural gas properties subject to amortization | 279,486,903 | 250,133,965 | ||||||||||||
| Inventory for property development | 3,711,149 | 1,582,427 | ||||||||||||
| Fixed assets subject to depreciation | 1,549,311 | 1,549,311 | ||||||||||||
| Total Property and Equipment | 284,747,363 | 253,265,703 | ||||||||||||
| Accumulated depreciation, depletion and amortization | (44,821,171 | ) | (41,347,152 | ) | ||||||||||
| Net Property and Equipment | 239,926,192 | 211,918,551 | ||||||||||||
| Deferred Income Taxes | 20,308,121 | 20,051,908 | ||||||||||||
| Deferred financing Costs | 338,354 | 406,025 | ||||||||||||
| Total Assets | $ | 321,151,254 | $ | 307,597,399 | ||||||||||
| LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||||||||||
| Current Liabilities | ||||||||||||||
| Accounts payable | $ | 18,561,210 | $ | 9,099,391 | ||||||||||
| Total Current Liabilities | 18,561,210 | 9,099,391 | ||||||||||||
| Asset retirement obligations | 8,329,654 | 7,957,035 | ||||||||||||
| Total Liabilities | 26,890,864 | 17,056,426 | ||||||||||||
| Stockholders' Equity | ||||||||||||||
| Preferred stock - $0.001 par value; 50,000,000 shares authorized; | ||||||||||||||
| No shares issued or outstanding | - | - | ||||||||||||
| Common stock - $0.001 par value; 150,000,000 shares authorized; | 49,116 | 49,113 | ||||||||||||
| Additional paid-in capital | 336,041,515 | 335,197,845 | ||||||||||||
| Retained Loss | (41,830,241 | ) | (44,705,985 | ) | ||||||||||
| Total Stockholders' Equity | 294,260,390 | 290,540,973 | ||||||||||||
| Total Liabilities and Stockholders' Equity | $ | 321,151,254 | $ | 307,597,399 | ||||||||||
| RING ENERGY, INC. | |||||||||||||
| STATEMENTS OF CASH FLOW | |||||||||||||
| Three Months Ended | |||||||||||||
| March 31, | |||||||||||||
| 2017 | 2016 | ||||||||||||
| Cash Flows From Operating Activities | |||||||||||||
| Net income (loss) | $ | 1,279,281 | ($15,275,044 | ) | |||||||||
| Adjustments to reconcile net income to net cash used in operating activities: | |||||||||||||
| Depreciation, depletion and amortization | 3,474,019 | 3,394,627 | |||||||||||
| Ceiling test impairment | - | 21,412,086 | |||||||||||
| Accretion expense | 137,176 | 109,378 | |||||||||||
| Share-based compensation | 991,210 | 584,325 | |||||||||||
| Deferred income tax provision (benefit) | 923,390 | (8,971,057 | ) | ||||||||||
| Excess tax benefits related to share-based compensation | 416,860 | - | |||||||||||
| Changes in assets and liabilities: | |||||||||||||
| Accounts receivable | (1,119,947 | ) | 904,886 | ||||||||||
| Prepaid expenses | 161,693 | 187,298 | |||||||||||
| Accounts payable | 4,761,819 | (4,086,181 | ) | ||||||||||
| Settlement of asset retirement obligation | (8,929 | ) | (1,344 | ) | |||||||||
| Net Cash Provided by (Used in) Operating Activities | 11,016,572 | (1,741,026 | ) | ||||||||||
| Cash Flows from Investing Activities | |||||||||||||
| Payments to purchase oil and natural gas properties | (3,924,404 | ) | (643,116 | ) | |||||||||
| Payments to develop oil and natural gas properties | (19,796,719 | ) | (3,258,542 | ) | |||||||||
| Purchase of inventory for development | (2,816,165 | ) | - | ||||||||||
| Net Cash Used in Investing Activities | (26,537,288 | ) | (3,901,658 | ) | |||||||||
| Cash Flows From Financing Activities | |||||||||||||
| Amounts paid for registration statement for future offerings | (147,537 | ) | - | ||||||||||
| Proceeds from issuance of notes payable | - | 5,000,000 | |||||||||||
| Proceeds from option exercise | - | 22,500 | |||||||||||
| Net Cash Provided by Financing Activities | (147,537 | ) | 5,022,500 | ||||||||||
| Net Decrease in Cash | (15,668,253 | ) | (620,184 | ) | |||||||||
| Cash at Beginning of Period | 71,086,381 | 4,431,350 | |||||||||||
| Cash at End of Period | $ | 55,418,128 | ($3,811,166 | ) | |||||||||
| Supplemental Cash Flow Information | |||||||||||||
| Cash paid for interest | - | $ | 352,662 | ||||||||||
| Noncash Investing and Financing Activities | |||||||||||||
| Asset retirement obligation incurred during development | $ | 244,372 | $ | 39,247 | |||||||||
| Use of inventory in property development | $ | 687,443 | - | ||||||||||
| Capitalized expenditures attributable to drilling projects financed through current liabilities | $ | 4,700,000 | - | ||||||||||
| RECONCILIATION OF CASH FLOW FROM OPERATIONS | |||||||||||||
| Net cash provided by operating activities | $ | 11,016,572 | ($1,741,026 | ) | |||||||||
| Change in operating assets and liabilities | (3,794,636 | ) | 2,995,341 | ||||||||||
| Cash flow from operations | $ | 7,221,936 | $ | 1,254,315 | |||||||||
|
| |||||||||||||
| Management believes that the non-GAAP measure of cash flow from operations is useful information for investors | |||||||||||||
| RING ENERGY, INC. | |||||||||||||
| NON-GAAP DISCLOSURE RECONCILIATION | |||||||||||||
| March 31, | March 31, | ||||||||||||
| 2017 | 2016 | ||||||||||||
| NET INCOME (LOSS) | $ | 1,279,281 | ($15,275,044 | ) | |||||||||
| Interest (income) | (116,679 | ) | (2,887 | ) | |||||||||
| Interest expense | - | 415,508 | |||||||||||
| Income tax expense (benefit) | 923,390 | (8,971,057 | ) | ||||||||||
| Excess tax benefits related to share-based compensation | 416,860 | - | |||||||||||
| Depreciation, depletion and amortization | 3,474,019 | 3,394,627 | |||||||||||
| Accretion of discounted liabilities | 137,176 | 109,378 | |||||||||||
| Ceiling test impairment | - | 21,412,086 | |||||||||||
| Share-based compensation | 991,210 | 584,325 | |||||||||||
| ADJUSTED EBITDA | $ | 7,105,257 | $ | 1,666,936 | |||||||||
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Contact
K M Financial, Inc.
Bill Parsons, 702-489-4447
