Ring Energy, Inc. (NYSE American: REI) (“Ring” or the “Company”)
today reported operational and financial results for the third
quarter of 2023. In addition, the Company updated its guidance for
the fourth quarter of 2023 and announced the successful sale of its
non-core operated New Mexico properties that closed on September
27, 2023.
Third Quarter
2023 Highlights
-
Closed on the previously announced acquisition of the Founders Oil
& Gas IV, LLC (“Founders” and the “Founders Acquisition”)
assets on August 15, 2023. The total cash paid was $50.0 million,
which was net of preliminary purchase price adjustments, plus a
remaining deferred cash payment estimated to be approximately $11.9
million due in December 2023;
-
Grew average sales volumes to 17,509 barrels of oil equivalent per
day (“Boe/d”) (69% oil) from 17,271 Boe/d (69% oil) for the second
quarter of 2023;
-
Positively impacting sequential quarterly sales volumes was the
Founders Acquisition and the continued success of the Company’s
2023 development program;
-
Partially offsetting the overall increase in sales volumes from the
second quarter of 2023 were several unanticipated and temporary
downtime events at certain third-party natural gas processing
facilities affecting natural gas and natural gas liquids (“NGLs”)
sales, and downtime due to a tank battery fire that led to a three
week outage of oil, natural gas, and associated NGLs sales at that
battery;
-
The Company exited the third quarter of 2023 at a production rate
in excess of 19,000 Boe/d;
-
Reported a net loss of $7.5 million, or $(0.04) per diluted share,
in the third quarter of 2023, versus net income of $28.8 million,
or $0.15 per diluted share, in the second quarter of 2023;
-
Third quarter 2023 included a loss on derivative contracts of
$39.2 million, while second quarter 2023 included a gain on
derivative contracts of $3.3 million;
-
Third quarter 2023 also included a benefit from income taxes of
$3.4 million, while second quarter 2023 included a benefit for
income taxes of $6.4 million;
-
Achieved Adjusted Net Income1 of $26.3 million, or $0.13 per
diluted share, for the third quarter of 2023 versus $28.0 million,
or $0.14 per diluted share, in the second quarter of 2023;
-
Generated record Adjusted EBITDA1 of $58.6 million for the third
quarter of 2023 — a 10% increase from $53.5 million in the
second quarter of 2023, matching the record set in this year’s
first quarter;
-
Increased Net Cash Provided by Operating Activities by 28% to $55.4
million in the third quarter of 2023 from $43.4 million in the
second quarter;
-
Produced Adjusted Free Cash Flow1 of $6.1 million versus $12.6
million in the second quarter of 2023, remaining cash flow positive
for the 16th consecutive quarter;
-
Ended the third quarter of 2023 with $428.0 million in outstanding
borrowings on the Company’s credit facility, including a pay-down
of $19.0 million net of the $50.0 million borrowed to fund the
Founders Acquisition;
-
Liquidity as of September 30, 2023 was $171.4 million and the
Leverage Ratio2 was 1.69x;
-
Stepped up the 2023 development program in the third quarter with
the drilling of 11 wells and the completion of eight wells, of
which five wells came online late in the period, that are expected
to positively impact the fourth quarter. As a result, capital
expenditures increased to $42.4 million from $31.6 million in the
second quarter;
-
Completed the sale of its non-core operated New Mexico assets to a
private buyer on September 27, 2023 for $4.5 million (the “New
Mexico Asset Transaction”) resulting in net proceeds of
approximately $3.8 million; and
-
Updated guidance for the fourth quarter of 2023 based on the
Company’s outlook for sales volumes, operating expenses and capital
spending.
Mr. Paul D. McKinney, Chairman of the Board and
Chief Executive Officer, commented, “Our third quarter results
benefited from an improved overall oil and gas commodity pricing
environment and the impact of the Founders Acquisition. This
backdrop helped drive record Adjusted EBITDA, which was a 10%
increase over the second quarter despite the unanticipated and
temporary downtime events that modestly lowered sales below
previous guidance. Another indicator of our success during the
third quarter was our repayment of $19 million in debt excluding
borrowings associated with funding the Founders Acquisition.”
Mr. McKinney concluded, “Looking to the balance
of the year and into 2024, we anticipate the current pricing
environment continuing, benefiting from our stepped up third
quarter capital spending program, and realizing a full quarter’s
production from the Founders Acquisition. This should lead to a
strong fourth quarter and position us for an excellent start to the
new year. We will continue to remain focused on improving our
balance sheet and the pursuit of accretive acquisitions. We intend
to achieve both through the proper allocation of our excess cash
from operations, the sale of additional non-core assets, and the
continued discipline and diligence associated with evaluating
potential acquisition candidates. The recent dispositions of our
Delaware Basin and New Mexico assets are examples of our commitment
in this regard, with the net proceeds from both transactions used
to further pay down debt. In short, executing on our value focused
proven strategy and reducing debt should position us to return
capital to our stockholders in the future.”
Financial Overview: For the
third quarter of 2023, the Company reported a net loss of $(7.5)
million, or $(0.04) per diluted share, which included a $33.9
million before-tax non-cash unrealized commodity derivative loss,
$2.2 million in before-tax share-based compensation, and $(0.2)
million in before-tax transaction related costs. The Company’s
Adjusted Net Income (which excludes the after-tax impact of the
adjustments) was $26.3 million, or $0.13 per diluted share. In the
second quarter of 2023, the Company reported net income of $28.8
million, or $0.15 per diluted share, which included a $3.1 million
before-tax non-cash unrealized commodity derivative gain, $2.3
million for before-tax share-based compensation, and $0.2 million
in before-tax transaction related costs. The Company’s Adjusted Net
Income for the second quarter of 2023 was $28.0 million, or $0.14
per diluted share. For the third quarter of 2022, Ring reported net
income of $75.1 million, or $0.49 per diluted share, which included
a $47.7 million before-tax non-cash unrealized commodity derivative
gain, $1.5 million in before-tax share-based compensation, and $1.1
million in before-tax transaction related costs. Adjusted Net
Income in the third quarter of 2022 was $32.5 million, or $0.21 per
diluted share.
Adjusted EBITDA grew 10% to $58.6 million for
the third quarter of 2023 from $53.5 million for the second quarter
of 2023, and 5% higher than $56.0 million for the third quarter of
2022. Third quarter 2023 Adjusted EBITDA tied the quarterly record
results posted in this year’s first quarter.
Adjusted Free Cash Flow for the third quarter of
2023 was $6.1 million versus $12.6 million for the second quarter
of 2023. Included was capital spending of $42.4 million in the
third quarter compared to $31.6 million in the second quarter, with
the increase in capital spending partially offset by the previously
discussed 10% increase in Adjusted EBITDA.
Adjusted Cash Flow from Operations was $48.5
million for the third quarter of 2023 compared to $44.0 million for
the second quarter of 2023 — a 10% sequential increase.
Adjusted Net Income, Adjusted EBITDA, Adjusted
Free Cash Flow, and Adjusted Cash Flow from Operations are non-GAAP
financial measures, which are described in more detail and
reconciled to the most comparable GAAP measures, in the tables
shown later in this release under “Non-GAAP Information.”
Sales Volumes, Prices and
Revenues: Sales volumes for the third quarter of 2023 were
17,509 Boe/d (69% oil, 16% natural gas and 15% NGLs), or 1,610,857
Boe, compared to 17,271 Boe/d (69% oil, 16% natural gas and 15%
NGLs), or 1,571,668 Boe, for the second quarter of 2023, with third
quarter 2023 sales volumes partially benefiting from the Founders
Acquisition and impacted by unanticipated and temporary downtime
events. In the third quarter of 2022, sales volumes were 13,278
Boe/d (76% oil, 13% natural gas and 11% NGLs), or 1,221,616 Boe.
Third quarter 2023 sales volumes were comprised of 1,106,531
barrels (“Bbls”) of oil, 1,567,104 thousand cubic feet (“Mcf”) of
natural gas and 243,142 Bbls of NGLs.
For the third quarter of 2023, the Company
realized an average sales price of $81.69 per barrel of crude oil,
$0.36 per Mcf of natural gas and $11.22 per barrel of NGLs. The
combined average realized sales price for the period was $58.16 per
Boe, up 15% versus $50.49 per Boe for the second quarter of 2023,
and down 25% from $77.28 per Boe in the third quarter of 2022. The
average oil price differential the Company experienced from NYMEX
WTI futures pricing in the third quarter of 2023 was a negative
$0.78 per barrel of crude oil, while the average natural gas price
differential from NYMEX futures pricing was a negative $2.45 per
Mcf.
Revenues were $93.7 million for the third
quarter of 2023 compared to $79.3 million for the second quarter of
2023 and $94.4 million for the third quarter of 2022. The 18%
increase in third quarter 2023 revenues from the second quarter of
2023 was driven by higher realized pricing and sales volumes.
Lease Operating Expense
(“LOE”): LOE, which includes expensed workovers and
facilities maintenance, was $18.0 million, or $11.18 per Boe, in
the third quarter of 2023 versus $15.9 million, or $10.14 per Boe,
in the second quarter of 2023. Although $18.0 million in LOE was as
budgeted, LOE per Boe for the third quarter of 2023 was slightly
above guidance due to lower sales volumes related to the
unanticipated and temporary downtime events previously discussed.
LOE for the third quarter of 2022 was $13.0 million, or $10.67 per
Boe. Contributing to the increase in absolute LOE from the second
quarter was the additional expenses from the newly acquired
properties and increased expensed workover activity.
Gathering, Transportation and Processing
(“GTP”) Costs: As previously disclosed, due to a
contractual change effective May 1, 2022, the Company no longer
maintains ownership and control of natural gas through processing.
As a result, GTP costs are now reflected as a reduction to the
natural gas sales price and not as an expense item.
Ad Valorem Taxes: Ad valorem
taxes were $1.10 per Boe for the third quarter of 2023 compared to
$1.06 per Boe in the second quarter of 2023 and $0.98 per Boe for
the third quarter of 2022.
Production Taxes: Production
taxes were $2.95 per Boe in the third quarter of 2023 compared to
$2.55 per Boe in the second quarter of 2023 and $3.74 per Boe in
third quarter of 2022. Production taxes ranged between 4.8% to 5.1%
of revenue for all three periods.
Depreciation, Depletion and Amortization
(“DD&A”) and Asset Retirement Obligation Accretion:
DD&A was $13.65 per Boe in the third quarter of 2023 versus
$13.23 per Boe for the second quarter of 2023 and $11.73 per Boe in
the third quarter of 2022. Asset retirement obligation accretion
was $0.22 per Boe in the third quarter of 2023 compared to $0.23
per Boe for the second quarter of 2023 and $0.20 per Boe in the
third quarter of 2022.
Operating Lease Expense:
Operating lease expense was $138,220 for the third quarter of 2023,
$115,353 for the second quarter of 2023, and $83,590 in the third
quarter of 2022. These expenses are primarily associated with the
Company’s office leases.
General and Administrative Expenses
(“G&A”): G&A was $7.1 million ($4.40 per Boe) for
the third quarter of 2023 versus $6.8 million ($4.33 per Boe) for
the second quarter of 2023 and $7.4 million ($6.05 per Boe) for the
third quarter of 2022. G&A, excluding non-cash share-based
compensation, was $4.9 million ($3.05 per Boe) for the third
quarter of 2023 versus $4.5 million ($2.89 per Boe) for the second
quarter of 2023 and $5.9 million ($4.79 per Boe) for the third
quarter of 2022. G&A, excluding non-cash share-based
compensation and executed transaction costs was $5.1 million ($3.15
per Boe), versus $4.3 million ($2.75 per Boe) for the second
quarter of 2023 and $4.7 million ($3.85 per Boe) for the third
quarter of 2022 — an 18% year-over-year decrease on a per Boe basis
that was substantially driven by the Company’s continued focus on
controlling absolute G&A expenses as its per barrel cost
profile improves through targeted acquisitions.
Interest Expense: Interest
expense was $11.4 million in the third quarter of 2023 versus $10.6
million for the second quarter of 2023 and $7.0 million for the
third quarter of 2022. Driving the increase was higher borrowings
on the credit facility and higher interest rates.
Derivative (Loss) Gain: In the
third quarter of 2023, Ring recorded a net loss of $39.2 million on
its commodity derivative contracts, including a realized $5.4
million cash commodity derivative loss and an unrealized $33.9
million non-cash commodity derivative loss. This compares to a net
gain of $3.3 million in the second quarter of 2023, including a
realized $0.2 million cash commodity derivative gain and an
unrealized $3.1 million non-cash commodity derivative gain, and a
net gain on commodity derivative contracts of $32.9 million in the
third quarter of 2022, including a realized $14.8 million cash
commodity derivative loss and an unrealized $47.7 million non-cash
commodity derivative gain.
A summary listing of the Company’s outstanding
derivative positions at September 30, 2023 is included in the
tables shown later in this release.
For the remainder (October through December) of
2023, the Company has approximately 593 thousand barrels of oil
(approximately 49% of oil sales guidance midpoint) hedged and
approximately 518 million cubic feet of natural gas (approximately
31% of natural gas sales guidance midpoint) hedged.
Income Tax: The Company
recorded a non-cash income tax benefit of $3.4 million in the third
quarter of 2023 versus a non-cash income tax benefit of $6.4
million in the second quarter of 2023 and a non-cash income tax
provision of $4.3 million for the third quarter of 2022. The
non-cash tax benefit in the second quarter of 2023 was primarily
due to the partial release of the valuation allowance.
Balance Sheet and Liquidity:
Total liquidity (defined as cash and cash equivalents plus
borrowing base availability) at the end of the third quarter of
2023 was $171.4 million, a 16% decrease from June 30, 2023 and a 4%
increase from September 30, 2022. Contributing to the overall
decrease in liquidity from June 30, 2023, was cash funding for the
initial deposit and closing cost totaling $50.0 million for the
Founders Acquisition. Liquidity at September 30, 2023
consisted of cash and cash equivalents of $0.1 million and $171.2
million of availability under Ring’s revolving credit facility,
which included a reduction of $0.8 million for letters of credit.
On September 30, 2023, the Company had $428.0 million in
borrowings outstanding on its credit facility that has a current
borrowing base of $600.0 million. Consistent with the past, the
Company is targeting further future debt reduction dependent on
market conditions, the timing and level of capital spending, and
other considerations.
Capital
Expenditures: During the third quarter of 2023,
accrued capital expenditures were $42.4 million, which was at the
higher end of the Company’s guidance of $37 million to $42 million,
substantially due to increased drilling activity in the third
quarter than previously anticipated. The Company drilled and
completed two 1-mile horizontal wells (one with a working interest
of 100% and the other with a working interest of 75%) in the NWS,
and three 1.5-mile horizontal wells (each with a working interest
of 100%) in the CBP. Additionally, in its Crane County acreage
within the CBP, the Company drilled and completed three vertical
wells (each with a working interest of 100%). Lastly, the Company
drilled and began the completion process on three 1-mile horizontal
wells in the NWS (each with a working interest of 90%).
Quarter |
|
Area |
|
Wells Drilled |
|
Wells Completed |
|
Recompletions |
|
|
|
|
|
|
|
|
|
1Q 2023 |
|
Northwest Shelf
(Horizontal) |
|
4 |
|
4 |
|
— |
|
|
Central Basin Platform
(Vertical) |
|
3 |
|
3 |
|
6 |
|
|
Total |
|
7 |
|
7 |
|
6 |
|
|
|
|
|
|
|
|
|
2Q 2023 |
|
Northwest Shelf
(Horizontal) |
|
4 |
|
4 |
|
— |
|
|
Central Basin Platform
(Vertical) |
|
2 |
|
2 |
|
3 |
|
|
Total |
|
6 |
|
6 |
|
3 |
|
|
|
|
|
|
|
|
|
3Q 2023 |
|
Northwest Shelf
(Horizontal) |
|
5 |
|
2 |
|
— |
|
|
Central Basin Platform
(Vertical) |
|
3 |
|
3 |
|
— |
|
|
Central
Basin Platform (Horizontal) |
|
3 |
|
3 |
|
— |
|
|
Total |
|
11 |
|
8 |
|
— |
Fourth Quarter 2023 Sales Volumes,
Capital Investment and Operating Expense Guidance
For the fourth quarter of 2023, Ring is updating
its previous guidance for sales volumes, capital spending and
operating expense. Benefiting the fourth quarter is the expectation
of a continued positive pricing environment, the stepped up capital
spending program from the third quarter with five wells coming on
late in the third quarter or early in the fourth quarter, and a
full quarter’s production from the wells acquired in the Founders
Acquisition.
Ring continues to expect fourth quarter sales
volumes of 18,900 to 19,500 Boe/d (69% oil, 16% natural gas, and
15% NGLs), which includes the additional volumes expected from the
stepped up capital spending program, but excludes the reduced
volumes from the New Mexico asset sale. Supporting the Company’s
outlook was its third quarter production exit rate in excess of
19,000 Boe/d.
The Company is now targeting total capital
expenditures in the fourth quarter of 2023 of $35 million to $40
million due to increased drilling and completion activity.
Additionally, the capital spending program includes funds for
targeted capital workovers, infrastructure upgrades, leasing costs,
and non-operated drilling, completion, and capital workovers.
All projects and estimates are based on assumed
WTI oil prices of $65 to $85 per barrel. As in the past, Ring has
designed its spending program with flexibility to respond to
changes in commodity prices and other market conditions as
appropriate.
Based on the $37.5 million mid-point of spending
guidance, the Company expects the following estimated allocation of
capital investments:
-
72% for drilling, completion, and related infrastructure;
-
22% for recompletions and capital workovers; and
-
6% for land, environmental and safety, and non-operated
capital.
The Company remains squarely focused on
continuing to generate Adjusted Free Cash Flow in the fourth
quarter with all planned capital expenditures to be fully funded by
cash on hand and cash from operations. Excess Adjusted Free Cash
Flow is currently targeted for further debt reduction.
The guidance in the table below represents the
Company's current good faith estimate of the range of likely future
results. Guidance could be affected by the factors discussed below
in the "Safe Harbor Statement" section.
|
|
Q4 |
|
|
2023 |
|
|
|
Sales
Volumes: |
|
|
Total (Boe/d) |
|
18,900 - 19,500 |
Mid Point (Boe/d) |
|
19,200 |
Oil (%) |
|
69% |
NGLs (%) |
|
15% |
Gas (%) |
|
16% |
|
|
|
Capital
Program: |
|
|
Capital spending(1) (millions) |
|
$35 - $40 |
|
|
|
Hz wells drilled |
|
3 - 4 |
Vertical wells drilled |
|
2 - 3 |
Wells completed and online |
|
8 - 10 |
|
|
|
Operating
Expenses: |
|
|
LOE (per Boe) |
|
$10.50 - $11.00 |
(1) In addition to Company-directed drilling and
completion activities, the capital spending outlook includes funds
for targeted capital workovers and infrastructure upgrades. Also
included is anticipated spending for leasing costs, and
non-operated drilling, completion, and capital workovers.
Conference Call Information
Ring will hold a conference call on Friday,
November 3, 2023 at 11:00 a.m. ET to discuss its third quarter 2023
operational and financial results. An updated investor presentation
will be posted to the Company’s website prior to the conference
call.
To participate in the conference call,
interested parties should dial 833-953-2433 at least five minutes
before the call is to begin. Please reference the “Ring Energy
Third Quarter 2023 Earnings Conference Call”. International callers
may participate by dialing 412-317-5762. The call will also be
webcast and available on Ring’s website at www.ringenergy.com under
“Investors” on the “News & Events” page. An audio replay will
also be available on the Company’s website following the call.
About Ring Energy, Inc.
Ring Energy, Inc. is an oil and gas exploration,
development, and production company with current operations focused
on the development of its Permian Basin assets. For additional
information, please visit www.ringenergy.com.
Safe Harbor Statement
This release contains forward-looking statements
within the meaning of Section 27A of the Securities Act of 1933, as
amended, and Section 21E of the Securities Exchange Act of 1934, as
amended. Forward-looking statements involve a wide variety of risks
and uncertainties, and include, without limitation, statements with
respect to the Company’s strategy and prospects. The
forward-looking statements include statements about the expected
benefits of the Founders Acquisition to Ring and its stockholders,
the expected future reserves, production, financial position,
business strategy, revenues, earnings, costs, capital expenditures
and debt levels of the Company, and plans and objectives of
management for future operations. Forward-looking statements are
based on current expectations and assumptions and analyses made by
Ring and its management in light of their experience and perception
of historical trends, current conditions and expected future
developments, as well as other factors appropriate under the
circumstances. However, whether actual results and developments
will conform to expectations is subject to a number of material
risks and uncertainties, including but not limited to: Ring’s
ability to integrate its combined operations successfully after the
Founders Acquisition and achieve anticipated benefits from it;
risks relating to any unforeseen liabilities of Ring or the assets
acquired in the Founders Acquisition; declines in oil, natural gas
liquids or natural gas prices; the level of success in exploration,
development and production activities; adverse weather conditions
that may negatively impact development or production activities;
the timing of exploration and development expenditures;
inaccuracies of reserve estimates or assumptions underlying them;
revisions to reserve estimates as a result of changes in commodity
prices; impacts to financial statements as a result of impairment
write-downs; risks related to level of indebtedness and periodic
redeterminations of the borrowing base and interest rates under the
Company’s credit facility; Ring’s ability to generate sufficient
cash flows from operations to meet the internally funded portion of
its capital expenditures budget; the impacts of hedging on results
of operations; and Ring’s ability to replace oil and natural gas
reserves. Such statements are subject to certain risks and
uncertainties which are disclosed in the Company’s reports filed
with the Securities and Exchange Commission, including its Form
10-K for the fiscal year ended December 31, 2022, and its other
filings. Ring undertakes no obligation to revise or update publicly
any forward-looking statements except as required by law.
Contact Information
Al Petrie AdvisorsAl Petrie, Senior PartnerPhone:
281-975-2146Email: apetrie@ringenergy.com
RING ENERGY, INC. |
Condensed Statements of Operations |
|
|
|
|
|
(Unaudited) |
|
(Unaudited) |
|
Three Months Ended |
|
Nine Months Ended |
|
September 30, |
|
June 30, |
|
September 30, |
|
September 30, |
|
September 30, |
|
|
2023 |
|
|
|
2023 |
|
|
|
2022 |
|
|
|
2023 |
|
|
|
2022 |
|
|
|
|
|
|
|
|
|
|
|
Oil, Natural Gas, and
Natural Gas Liquids Revenues |
$ |
93,681,798 |
|
|
$ |
79,348,573 |
|
|
$ |
94,408,948 |
|
|
$ |
261,113,283 |
|
|
$ |
247,551,855 |
|
|
|
|
|
|
|
|
|
|
|
Costs and Operating
Expenses |
|
|
|
|
|
|
|
|
|
Lease operating expenses |
|
18,015,348 |
|
|
|
15,938,106 |
|
|
|
13,029,098 |
|
|
|
51,426,145 |
|
|
|
30,283,706 |
|
Gathering, transportation and processing costs |
|
(4,530 |
) |
|
|
(1,632 |
) |
|
|
— |
|
|
|
(6,985 |
) |
|
|
1,846,247 |
|
Ad valorem taxes |
|
1,779,163 |
|
|
|
1,670,343 |
|
|
|
1,199,385 |
|
|
|
5,120,119 |
|
|
|
3,100,578 |
|
Oil and natural gas production taxes |
|
4,753,289 |
|
|
|
4,012,139 |
|
|
|
4,563,519 |
|
|
|
13,173,568 |
|
|
|
11,939,338 |
|
Depreciation, depletion and amortization |
|
21,989,034 |
|
|
|
20,792,932 |
|
|
|
14,324,502 |
|
|
|
64,053,637 |
|
|
|
34,854,993 |
|
Asset retirement obligation accretion |
|
354,175 |
|
|
|
353,878 |
|
|
|
243,140 |
|
|
|
1,073,900 |
|
|
|
617,685 |
|
Operating lease expense |
|
138,220 |
|
|
|
115,353 |
|
|
|
83,590 |
|
|
|
366,711 |
|
|
|
250,770 |
|
General and administrative expense |
|
7,083,574 |
|
|
|
6,810,243 |
|
|
|
7,393,848 |
|
|
|
21,023,956 |
|
|
|
18,748,427 |
|
|
|
|
|
|
|
|
|
|
|
Total Costs and Operating Expenses |
|
54,108,273 |
|
|
|
49,691,362 |
|
|
|
40,837,082 |
|
|
|
156,231,051 |
|
|
|
101,641,744 |
|
|
|
|
|
|
|
|
|
|
|
Income from
Operations |
|
39,573,525 |
|
|
|
29,657,211 |
|
|
|
53,571,866 |
|
|
|
104,882,232 |
|
|
|
145,910,111 |
|
|
|
|
|
|
|
|
|
|
|
Other Income
(Expense) |
|
|
|
|
|
|
|
|
|
Interest income |
|
80,426 |
|
|
|
79,745 |
|
|
|
4 |
|
|
|
160,171 |
|
|
|
4 |
|
Interest (expense) |
|
(11,381,754 |
) |
|
|
(10,550,807 |
) |
|
|
(7,021,385 |
) |
|
|
(32,322,840 |
) |
|
|
(13,699,045 |
) |
Gain (loss) on derivative contracts |
|
(39,222,755 |
) |
|
|
3,264,660 |
|
|
|
32,851,189 |
|
|
|
(26,483,190 |
) |
|
|
(2,201,970 |
) |
Gain (loss) on disposal of assets |
|
— |
|
|
|
(132,109 |
) |
|
|
— |
|
|
|
(132,109 |
) |
|
|
— |
|
Other income |
|
— |
|
|
|
116,610 |
|
|
|
— |
|
|
|
126,210 |
|
|
|
— |
|
Net Other Income (Expense) |
|
(50,524,083 |
) |
|
|
(7,221,901 |
) |
|
|
25,829,808 |
|
|
|
(58,651,758 |
) |
|
|
(15,901,011 |
) |
|
|
|
|
|
|
|
|
|
|
Income (Loss) Before
Benefit from (Provision for) Income Taxes |
|
(10,950,558 |
) |
|
|
22,435,310 |
|
|
|
79,401,674 |
|
|
|
46,230,474 |
|
|
|
130,009,100 |
|
|
|
|
|
|
|
|
|
|
|
Benefit from
(Provision for) Income Taxes |
|
3,411,336 |
|
|
|
6,356,295 |
|
|
|
(4,315,783 |
) |
|
|
7,737,688 |
|
|
|
(5,866,744 |
) |
|
|
|
|
|
|
|
|
|
|
Net Income
(Loss) |
$ |
(7,539,222 |
) |
|
$ |
28,791,605 |
|
|
$ |
75,085,891 |
|
|
$ |
53,968,162 |
|
|
$ |
124,142,356 |
|
|
|
|
|
|
|
|
|
|
|
Basic Earnings (Loss)
per Share |
$ |
(0.04 |
) |
|
$ |
0.15 |
|
|
$ |
0.65 |
|
|
$ |
0.29 |
|
|
$ |
1.16 |
|
Diluted Earnings
(Loss) per Share |
$ |
(0.04 |
) |
|
$ |
0.15 |
|
|
$ |
0.49 |
|
|
$ |
0.28 |
|
|
$ |
0.92 |
|
|
|
|
|
|
|
|
|
|
|
Basic Weighted-Average Shares
Outstanding |
|
195,361,476 |
|
|
|
193,077,859 |
|
|
|
115,376,280 |
|
|
|
188,865,752 |
|
|
|
107,349,184 |
|
Diluted Weighted-Average
Shares Outstanding |
|
195,361,476 |
|
|
|
195,866,533 |
|
|
|
151,754,995 |
|
|
|
194,583,215 |
|
|
|
134,826,275 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
RING ENERGY, INC. |
Condensed Operating Data |
(Unaudited) |
|
|
|
|
|
Three Months Ended |
|
Nine Months Ended |
|
September 30, |
|
June 30, |
|
September 30, |
|
September 30, |
|
September 30, |
|
|
2023 |
|
|
|
2023 |
|
|
|
2022 |
|
|
|
2023 |
|
|
|
2022 |
|
|
|
|
|
|
|
|
|
|
|
Net sales
volumes: |
|
|
|
|
|
|
|
|
|
Oil (Bbls) |
|
1,106,531 |
|
|
|
1,079,379 |
|
|
|
932,770 |
|
|
|
3,325,323 |
|
|
|
2,338,469 |
|
Natural gas (Mcf) |
|
1,567,104 |
|
|
|
1,557,545 |
|
|
|
952,762 |
|
|
|
4,726,056 |
|
|
|
2,408,241 |
|
Natural gas liquids (Bbls)(1) |
|
243,142 |
|
|
|
232,698 |
|
|
|
130,052 |
|
|
|
715,832 |
|
|
|
130,052 |
|
Total oil, natural gas and natural gas liquids (Boe)(1)(2) |
|
1,610,857 |
|
|
|
1,571,668 |
|
|
|
1,221,616 |
|
|
|
4,828,831 |
|
|
|
2,869,895 |
|
% Oil |
|
69 |
% |
|
|
69 |
% |
|
|
76 |
% |
|
|
69 |
% |
|
|
81 |
% |
|
|
|
|
|
|
|
|
|
|
Average daily equivalent sales
(Boe/d) |
|
17,509 |
|
|
|
17,271 |
|
|
|
13,278 |
|
|
|
17,688 |
|
|
|
10,512 |
|
|
|
|
|
|
|
|
|
|
|
Average realized sales
prices: |
|
|
|
|
|
|
|
|
|
Oil ($/Bbl) |
$ |
81.69 |
|
|
$ |
72.30 |
|
|
$ |
92.64 |
|
|
$ |
75.79 |
|
|
$ |
98.16 |
|
Natural gas ($/Mcf) |
|
0.36 |
|
|
|
(0.71 |
) |
|
|
4.89 |
|
|
|
0.11 |
|
|
|
6.10 |
|
Natural gas liquids ($/Bbls)(1) |
|
11.22 |
|
|
|
10.35 |
|
|
|
25.68 |
|
|
|
11.97 |
|
|
|
25.68 |
|
Barrel of oil equivalent ($/Boe) |
$ |
58.16 |
|
|
$ |
50.49 |
|
|
$ |
77.28 |
|
|
$ |
54.07 |
|
|
$ |
86.26 |
|
|
|
|
|
|
|
|
|
|
|
Average costs and
expenses per Boe ($/Boe): |
|
|
|
|
|
|
|
|
|
Lease operating expenses |
$ |
11.18 |
|
|
$ |
10.14 |
|
|
$ |
10.67 |
|
|
$ |
10.65 |
|
|
$ |
10.55 |
|
Gathering, transportation and processing costs |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
0.64 |
|
Ad valorem taxes |
|
1.10 |
|
|
|
1.06 |
|
|
|
0.98 |
|
|
|
1.06 |
|
|
|
1.08 |
|
Oil and natural gas production taxes |
|
2.95 |
|
|
|
2.55 |
|
|
|
3.74 |
|
|
|
2.73 |
|
|
|
4.16 |
|
Depreciation, depletion and amortization |
|
13.65 |
|
|
|
13.23 |
|
|
|
11.73 |
|
|
|
13.26 |
|
|
|
12.15 |
|
Asset retirement obligation accretion |
|
0.22 |
|
|
|
0.23 |
|
|
|
0.20 |
|
|
|
0.22 |
|
|
|
0.22 |
|
Operating lease expense |
|
0.09 |
|
|
|
0.07 |
|
|
|
0.07 |
|
|
|
0.08 |
|
|
|
0.09 |
|
General and administrative expense (including share-based
compensation) |
|
4.40 |
|
|
|
4.33 |
|
|
|
6.05 |
|
|
|
4.35 |
|
|
|
6.53 |
|
G&A (excluding share-based compensation) |
|
3.05 |
|
|
|
2.89 |
|
|
|
4.79 |
|
|
|
3.03 |
|
|
|
4.80 |
|
G&A (excluding share-based compensation and transaction
costs) |
|
3.15 |
|
|
|
2.75 |
|
|
|
3.85 |
|
|
|
3.02 |
|
|
|
4.40 |
|
(1) Beginning July 1, 2022, revenues were reported on a
three-stream basis, separately reporting crude oil, natural gas,
and natural gas liquids volumes and sales. For periods prior to
July 1, 2022, volumes and sales for natural gas liquids were
presented with natural gas.(2) Boe is determined using the ratio of
six Mcf of natural gas to one Bbl of oil (totals may not compute
due to rounding.) The conversion ratio does not assume price
equivalency and the price on an equivalent basis for oil, natural
gas, and natural gas liquids may differ significantly.
|
RING ENERGY, INC. |
Condensed Balance Sheets |
|
|
|
|
|
|
|
(Unaudited) |
|
|
|
|
September 30, 2023 |
|
December 31, 2022 |
ASSETS |
|
|
|
|
Current
Assets |
|
|
|
|
Cash and cash equivalents |
|
$ |
138,581 |
|
|
$ |
3,712,526 |
|
Accounts receivable |
|
|
45,756,047 |
|
|
|
42,448,719 |
|
Joint interest billing
receivables, net |
|
|
3,306,125 |
|
|
|
983,802 |
|
Derivative assets |
|
|
1,845,133 |
|
|
|
4,669,162 |
|
Inventory |
|
|
5,548,835 |
|
|
|
9,250,717 |
|
Prepaid expenses and other
assets |
|
|
2,033,013 |
|
|
|
2,101,538 |
|
Total Current
Assets |
|
|
58,627,734 |
|
|
|
63,166,464 |
|
Properties and
Equipment |
|
|
|
|
Oil and natural gas
properties, full cost method |
|
|
1,628,230,243 |
|
|
|
1,463,838,595 |
|
Financing lease asset subject
to depreciation |
|
|
3,306,372 |
|
|
|
3,019,476 |
|
Fixed assets subject to
depreciation |
|
|
2,946,274 |
|
|
|
3,147,125 |
|
Total Properties and
Equipment |
|
|
1,634,482,889 |
|
|
|
1,470,005,196 |
|
Accumulated depreciation,
depletion and amortization |
|
|
(353,111,293 |
) |
|
|
(289,935,259 |
) |
Net Properties and
Equipment |
|
|
1,281,371,596 |
|
|
|
1,180,069,937 |
|
Operating lease asset |
|
|
2,644,519 |
|
|
|
1,735,013 |
|
Derivative assets |
|
|
6,465,355 |
|
|
|
6,129,410 |
|
Deferred financing costs |
|
|
14,199,738 |
|
|
|
17,898,973 |
|
Total
Assets |
|
$ |
1,363,308,942 |
|
|
$ |
1,268,999,797 |
|
|
|
|
|
|
LIABILITIES AND
STOCKHOLDERS’ EQUITY |
|
|
|
|
Current
Liabilities |
|
|
|
|
Accounts payable |
|
$ |
110,392,713 |
|
|
$ |
111,398,268 |
|
Income tax liability |
|
|
264,261 |
|
|
|
— |
|
Financing lease liability |
|
|
806,993 |
|
|
|
709,653 |
|
Operating lease liability |
|
|
503,420 |
|
|
|
398,362 |
|
Derivative liabilities |
|
|
23,906,800 |
|
|
|
13,345,619 |
|
Notes payable |
|
|
950,068 |
|
|
|
499,880 |
|
Deferred cash payment |
|
|
14,783,879 |
|
|
|
14,807,276 |
|
Asset retirement
obligations |
|
|
279,681 |
|
|
|
635,843 |
|
Total Current
Liabilities |
|
|
151,887,815 |
|
|
|
141,794,901 |
|
|
|
|
|
|
Non-current
Liabilities |
|
|
|
|
Deferred income taxes |
|
|
497,067 |
|
|
|
8,499,016 |
|
Revolving line of credit |
|
|
428,000,000 |
|
|
|
415,000,000 |
|
Financing lease liability,
less current portion |
|
|
690,456 |
|
|
|
1,052,479 |
|
Operating lease liability,
less current portion |
|
|
2,207,248 |
|
|
|
1,473,897 |
|
Derivative liabilities |
|
|
18,089,847 |
|
|
|
10,485,650 |
|
Asset retirement
obligations |
|
|
28,482,982 |
|
|
|
29,590,463 |
|
Total
Liabilities |
|
|
629,855,415 |
|
|
|
607,896,406 |
|
Commitments and
contingencies |
|
|
|
|
Stockholders'
Equity |
|
|
|
|
Preferred stock - $0.001 par
value; 50,000,000 shares authorized; no shares issued or
outstanding |
|
|
— |
|
|
|
— |
|
Common stock - $0.001 par
value; 450,000,000 shares authorized; 195,380,527 shares and
175,530,212 shares issued and outstanding, respectively |
|
|
195,380 |
|
|
|
175,530 |
|
Additional paid-in
capital |
|
|
793,603,238 |
|
|
|
775,241,114 |
|
Accumulated deficit |
|
|
(60,345,091 |
) |
|
|
(114,313,253 |
) |
Total Stockholders’
Equity |
|
|
733,453,527 |
|
|
|
661,103,391 |
|
Total Liabilities and
Stockholders' Equity |
|
$ |
1,363,308,942 |
|
|
$ |
1,268,999,797 |
|
|
|
|
|
|
|
|
|
|
RING ENERGY, INC. |
Condensed Statements of Cash Flows |
(Unaudited) |
|
|
|
|
|
Three Months Ended |
|
Nine Months Ended |
|
September 30, |
|
June 30, |
|
September 30, |
|
September 30, |
|
September 30, |
|
|
2023 |
|
|
|
2023 |
|
|
|
2022 |
|
|
|
2023 |
|
|
|
2022 |
|
|
|
|
|
|
|
|
|
|
|
Cash Flows From
Operating Activities |
|
|
|
|
|
|
|
|
|
Net income (loss) |
$ |
(7,539,222 |
) |
|
$ |
28,791,605 |
|
|
$ |
75,085,891 |
|
|
$ |
53,968,162 |
|
|
$ |
124,142,356 |
|
Adjustments to reconcile net income (loss) to net cash provided by
operating activities: |
|
|
|
|
|
|
|
|
|
Depreciation, depletion and amortization |
|
21,989,034 |
|
|
|
20,792,932 |
|
|
|
14,324,503 |
|
|
|
64,053,637 |
|
|
|
34,854,993 |
|
Asset retirement obligation accretion |
|
354,175 |
|
|
|
353,878 |
|
|
|
243,140 |
|
|
|
1,073,900 |
|
|
|
617,685 |
|
Amortization of deferred financing costs |
|
1,258,466 |
|
|
|
1,220,385 |
|
|
|
1,095,073 |
|
|
|
3,699,235 |
|
|
|
1,483,621 |
|
Share-based compensation |
|
2,170,735 |
|
|
|
2,260,312 |
|
|
|
1,543,033 |
|
|
|
6,374,743 |
|
|
|
4,964,188 |
|
Bad debt expense |
|
19,656 |
|
|
|
19,315 |
|
|
|
— |
|
|
|
41,865 |
|
|
|
— |
|
Deferred income tax expense (benefit) |
|
(3,585,002 |
) |
|
|
(6,548,363 |
) |
|
|
4,279,047 |
|
|
|
(8,160,712 |
) |
|
|
5,830,008 |
|
Excess tax expense (benefit) related to share-based
compensation |
|
7,886 |
|
|
|
150,877 |
|
|
|
— |
|
|
|
158,763 |
|
|
|
— |
|
(Gain) loss on derivative contracts |
|
39,222,755 |
|
|
|
(3,264,660 |
) |
|
|
(32,851,189 |
) |
|
|
26,483,190 |
|
|
|
2,201,970 |
|
Cash received (paid) for derivative settlements, net |
|
(5,350,798 |
) |
|
|
179,595 |
|
|
|
(14,861,116 |
) |
|
|
(5,829,728 |
) |
|
|
(48,593,882 |
) |
Changes in operating assets and liabilities: |
|
|
|
|
|
|
|
|
|
Accounts receivable |
|
(14,419,854 |
) |
|
|
5,320,051 |
|
|
|
(6,907,079 |
) |
|
|
(5,671,516 |
) |
|
|
(21,300,907 |
) |
Inventory |
|
1,778,460 |
|
|
|
1,480,824 |
|
|
|
— |
|
|
|
3,701,882 |
|
|
|
— |
|
Prepaid expenses and other assets |
|
1,028,203 |
|
|
|
(1,489,612 |
) |
|
|
(40,823 |
) |
|
|
68,525 |
|
|
|
(2,308,540 |
) |
Accounts payable |
|
18,562,202 |
|
|
|
(5,471,391 |
) |
|
|
27,144,096 |
|
|
|
3,500,913 |
|
|
|
33,992,075 |
|
Settlement of asset retirement obligation |
|
(105,721 |
) |
|
|
(429,567 |
) |
|
|
(881,768 |
) |
|
|
(1,025,607 |
) |
|
|
(2,548,344 |
) |
Net Cash Provided by Operating Activities |
|
55,390,975 |
|
|
|
43,366,181 |
|
|
|
68,172,808 |
|
|
|
142,437,252 |
|
|
|
133,335,223 |
|
|
|
|
|
|
|
|
|
|
|
Cash Flows From
Investing Activities |
|
|
|
|
|
|
|
|
|
Payments for the Stronghold Acquisition |
|
— |
|
|
|
— |
|
|
|
(183,359,626 |
) |
|
|
(18,511,170 |
) |
|
|
(183,359,626 |
) |
Payments for the Founders Acquisition |
|
(49,902,757 |
) |
|
|
— |
|
|
|
— |
|
|
|
(49,902,757 |
) |
|
|
— |
|
Payments to purchase oil and natural gas properties |
|
(726,519 |
) |
|
|
(819,644 |
) |
|
|
(467,840 |
) |
|
|
(1,605,262 |
) |
|
|
(1,211,691 |
) |
Payments to develop oil and natural gas properties |
|
(40,444,810 |
) |
|
|
(35,611,915 |
) |
|
|
(34,121,878 |
) |
|
|
(112,996,032 |
) |
|
|
(83,776,050 |
) |
Payments to acquire or improve fixed assets subject to
depreciation |
|
(183,904 |
) |
|
|
(11,324 |
) |
|
|
(66,838 |
) |
|
|
(209,798 |
) |
|
|
(158,598 |
) |
Sale of fixed assets subject to depreciation |
|
— |
|
|
|
332,230 |
|
|
|
— |
|
|
|
332,230 |
|
|
|
134,600 |
|
Proceeds from divestiture of equipment for oil and natural gas
properties |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
54,558 |
|
|
|
25,066 |
|
Proceeds from sale of Delaware properties |
|
(384,225 |
) |
|
|
7,992,917 |
|
|
|
— |
|
|
|
7,608,692 |
|
|
|
— |
|
Proceeds from sale of New Mexico properties |
|
4,312,502 |
|
|
|
— |
|
|
|
— |
|
|
|
4,312,502 |
|
|
|
— |
|
Net Cash (Used in) Investing Activities |
|
(87,329,713 |
) |
|
|
(28,117,736 |
) |
|
|
(218,016,182 |
) |
|
|
(170,917,037 |
) |
|
|
(268,346,299 |
) |
|
|
|
|
|
|
|
|
|
|
Cash Flows From
Financing Activities |
|
|
|
|
|
|
|
|
|
Proceeds from revolving line of credit |
|
94,500,000 |
|
|
|
28,500,000 |
|
|
|
541,500,000 |
|
|
|
179,000,000 |
|
|
|
592,000,000 |
|
Payments on revolving line of credit |
|
(63,500,000 |
) |
|
|
(53,500,000 |
) |
|
|
(376,500,000 |
) |
|
|
(166,000,000 |
) |
|
|
(447,000,000 |
) |
Proceeds from issuance of common stock from warrant exercises |
|
— |
|
|
|
8,687,655 |
|
|
|
2,400,000 |
|
|
|
12,301,596 |
|
|
|
7,563,126 |
|
Payments for taxes withheld on vested restricted shares, net |
|
(18,302 |
) |
|
|
(141,682 |
) |
|
|
(6,790 |
) |
|
|
(294,365 |
) |
|
|
(264,484 |
) |
Proceeds from notes payable |
|
— |
|
|
|
1,565,071 |
|
|
|
316,677 |
|
|
|
1,565,071 |
|
|
|
1,245,303 |
|
Payments on notes payable |
|
(462,606 |
) |
|
|
(152,397 |
) |
|
|
(333,341 |
) |
|
|
(1,114,883 |
) |
|
|
(954,082 |
) |
Payment of deferred financing costs |
|
— |
|
|
|
— |
|
|
|
(18,762,502 |
) |
|
|
— |
|
|
|
(18,762,502 |
) |
Reduction of financing lease liabilities |
|
(191,748 |
) |
|
|
(182,817 |
) |
|
|
(103,392 |
) |
|
|
(551,579 |
) |
|
|
(334,034 |
) |
Net Cash Provided by (Used in) Financing
Activities |
|
30,327,344 |
|
|
|
(15,224,170 |
) |
|
|
148,510,652 |
|
|
|
24,905,840 |
|
|
|
133,493,327 |
|
|
|
|
|
|
|
|
|
|
|
Net Increase
(Decrease) in Cash |
|
(1,611,394 |
) |
|
|
24,275 |
|
|
|
(1,332,722 |
) |
|
|
(3,573,945 |
) |
|
|
(1,517,749 |
) |
Cash at Beginning of
Period |
|
1,749,975 |
|
|
|
1,725,700 |
|
|
|
2,223,289 |
|
|
|
3,712,526 |
|
|
|
2,408,316 |
|
Cash at End of
Period |
$ |
138,581 |
|
|
$ |
1,749,975 |
|
|
$ |
890,567 |
|
|
$ |
138,581 |
|
|
$ |
890,567 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The following tables reflect the details of current derivative
contracts as of September 30, 2023 (Quantities are in barrels
(Bbl) for the oil derivative contracts and in million British
thermal units (MMBtu) for the natural gas derivative
contracts.):
RING ENERGY, INC. |
Financial Commodity Derivative Positions |
As of September 30, 2023 |
|
|
|
Oil Hedges (WTI) |
|
Q4 2023 |
|
Q1 2024 |
|
Q2 2024 |
|
Q3 2024 |
|
Q4 2024 |
|
Q1 2025 |
|
Q2 2025 |
|
Q3 2025 |
|
Q4 2025 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Swaps: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Hedged volume (Bbl) |
|
138,000 |
|
|
170,625 |
|
|
156,975 |
|
|
282,900 |
|
|
368,000 |
|
|
— |
|
|
— |
|
|
184,000 |
|
|
— |
Weighted average swap
price |
$ |
74.52 |
|
$ |
67.40 |
|
$ |
66.40 |
|
$ |
65.49 |
|
$ |
68.43 |
|
$ |
— |
|
$ |
— |
|
$ |
73.35 |
|
$ |
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deferred premium
puts: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Hedged volume (Bbl) |
|
165,600 |
|
|
45,500 |
|
|
45,500 |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
Weighted average strike
price |
$ |
83.78 |
|
$ |
84.70 |
|
$ |
82.80 |
|
$ |
— |
|
$ |
— |
|
$ |
— |
|
$ |
— |
|
$ |
— |
|
$ |
— |
Weighted average deferred
premium price |
$ |
14.61 |
|
$ |
17.15 |
|
$ |
17.49 |
|
$ |
— |
|
$ |
— |
|
$ |
— |
|
$ |
— |
|
$ |
— |
|
$ |
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Two-way
collars: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Hedged volume (Bbl) |
|
274,285 |
|
|
339,603 |
|
|
325,847 |
|
|
230,000 |
|
|
128,800 |
|
|
474,750 |
|
|
464,100 |
|
|
184,000 |
|
|
— |
Weighted average put
price |
$ |
56.73 |
|
$ |
64.20 |
|
$ |
64.30 |
|
$ |
64.00 |
|
$ |
60.00 |
|
$ |
57.06 |
|
$ |
60.00 |
|
$ |
65.00 |
|
$ |
— |
Weighted average call
price |
$ |
70.77 |
|
$ |
79.73 |
|
$ |
79.09 |
|
$ |
76.50 |
|
$ |
73.24 |
|
$ |
75.82 |
|
$ |
69.85 |
|
$ |
80.08 |
|
$ |
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three-way
collars: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Hedged volume (Bbl) |
|
15,598 |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
Weighted average first put
price |
$ |
45.00 |
|
$ |
— |
|
$ |
— |
|
$ |
— |
|
$ |
— |
|
$ |
— |
|
$ |
— |
|
$ |
— |
|
$ |
— |
Weighted average second put
price |
$ |
55.00 |
|
$ |
— |
|
$ |
— |
|
$ |
— |
|
$ |
— |
|
$ |
— |
|
$ |
— |
|
$ |
— |
|
$ |
— |
Weighted average call
price |
$ |
80.05 |
|
$ |
— |
|
$ |
— |
|
$ |
— |
|
$ |
— |
|
$ |
— |
|
$ |
— |
|
$ |
— |
|
$ |
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gas Hedges (Henry Hub) |
|
Q4 2023 |
|
Q1 2024 |
|
Q2 2024 |
|
Q3 2024 |
|
Q4 2024 |
|
Q1 2025 |
|
Q2 2025 |
|
Q3 2025 |
|
Q4 2025 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NYMEX
Swaps: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Hedged volume (MMBtu) |
|
134,102 |
|
|
152,113 |
|
|
138,053 |
|
|
121,587 |
|
|
644,946 |
|
|
616,199 |
|
|
591,725 |
|
|
285,200 |
|
|
— |
Weighted average swap
price |
$ |
3.35 |
|
$ |
3.62 |
|
$ |
3.61 |
|
$ |
3.59 |
|
$ |
4.45 |
|
$ |
3.78 |
|
$ |
3.43 |
|
$ |
3.73 |
|
$ |
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Two-way
collars: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Hedged volume (MMBtu) |
|
383,587 |
|
|
591,500 |
|
|
568,750 |
|
|
552,000 |
|
|
— |
|
|
— |
|
|
— |
|
|
285,200 |
|
|
— |
Weighted average put
price |
$ |
3.15 |
|
$ |
4.00 |
|
$ |
4.00 |
|
$ |
4.00 |
|
$ |
— |
|
$ |
— |
|
$ |
— |
|
$ |
3.00 |
|
$ |
— |
Call hedged volume
(MMBtu) |
|
383,587 |
|
|
591,500 |
|
|
568,750 |
|
|
552,000 |
|
|
— |
|
|
— |
|
|
— |
|
|
285,200 |
|
|
— |
Weighted average call
price |
$ |
4.51 |
|
$ |
6.29 |
|
$ |
6.29 |
|
$ |
6.29 |
|
$ |
— |
|
$ |
— |
|
$ |
— |
|
$ |
4.80 |
|
$ |
— |
|
Oil Hedges (basis differential) |
|
Q4 2023 |
|
Q1 2024 |
|
Q2 2024 |
|
Q3 2024 |
|
Q4 2024 |
|
Q1 2025 |
|
Q2 2025 |
|
Q3 2025 |
|
Q4 2025 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Argus basis
swaps: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Hedged volume (MMBtu) |
|
305,000 |
|
|
364,000 |
|
|
364,000 |
|
|
368,000 |
|
|
368,000 |
|
|
270,000 |
|
|
273,000 |
|
|
276,000 |
|
|
276,000 |
Weighted average spread price
(1) |
$ |
1.10 |
|
$ |
1.15 |
|
$ |
1.15 |
|
$ |
1.15 |
|
$ |
1.15 |
|
$ |
1.00 |
|
$ |
1.00 |
|
$ |
1.00 |
|
$ |
1.00 |
|
Gas Hedges (basis differential) |
|
Q4 2023 |
|
Q1 2024 |
|
Q2 2024 |
|
Q3 2024 |
|
Q4 2024 |
|
Q1 2025 |
|
Q2 2025 |
|
Q3 2025 |
|
Q4 2025 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Waha basis
swaps: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Hedged volume (MMBtu) |
|
324,021 |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
Weighted average spread price
(1) |
$ |
0.55 |
|
$ |
— |
|
$ |
— |
|
$ |
— |
|
$ |
— |
|
$ |
— |
|
$ |
— |
|
$ |
— |
|
$ |
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
El Paso Permian Basin
basis swaps: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Hedged volume (MMBtu) |
|
459,683 |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
Weighted average spread price
(1) |
$ |
0.63 |
|
$ |
— |
|
$ |
— |
|
$ |
— |
|
$ |
— |
|
$ |
— |
|
$ |
— |
|
$ |
— |
|
$ |
— |
(1) The oil basis swap hedges are calculated as
the fixed price (weighted average spread price above) less the
difference between WTI Midland and WTI Cushing, in the issue of
Argus Americas Crude. The gas basis swap hedges are calculated as
the Henry Hub natural gas price less the fixed amount specified as
the weighted average spread price above.
RING ENERGY, INC.
Non-GAAP Financial
Information
Certain financial information included in this
release are not measures of financial performance recognized by
accounting principles generally accepted in the United States
(“GAAP”). These non-GAAP financial measures are “Adjusted Net
Income”, “Adjusted EBITDA”, “Adjusted Free Cash Flow” or “AFCF,”
“Adjusted Cash Flow from Operations” or “ACFFO,” “G&A Excluding
Share-Based Compensation,” “G&A Excluding Share-Based
Compensation and Transaction Costs,” and “Leverage Ratio.”
Management uses these non-GAAP financial measures in its analysis
of performance. In addition, Adjusted EBITDA is a key metric used
to determine the Company’s incentive compensation awards. These
disclosures may not be viewed as a substitute for results
determined in accordance with GAAP and are not necessarily
comparable to non-GAAP performance measures which may be reported
by other companies.
Reconciliation of Net Income (Loss) to
Adjusted Net Income
“Adjusted Net Income” is calculated as net
income (loss) minus the estimated after-tax impact of share-based
compensation, ceiling test impairment, unrealized gains and losses
on changes in the fair value of derivatives, and related
transaction costs. Adjusted Net Income is presented because the
timing and amount of these items cannot be reasonably estimated and
affect the comparability of operating results from period to
period, and current period to prior periods. The Company believes
that the presentation of Adjusted Net Income provides useful
information to investors as it is one of the metrics management
uses to assess the Company’s ongoing operating and financial
performance, and also is a useful metric for investors to compare
our results with our peers.
|
(Unaudited for All Periods) |
|
Three Months Ended |
|
Nine Months Ended |
|
September 30, |
|
June 30, |
|
September 30, |
|
September 30, |
|
September 30, |
|
|
2023 |
|
|
|
2023 |
|
|
|
2022 |
|
|
|
2023 |
|
|
|
2022 |
|
|
Total |
|
Per share - diluted |
|
Total |
|
Per share - diluted |
|
Total |
|
Per share - diluted |
|
Total |
|
Per share - diluted |
|
Total |
|
Per share - diluted |
Net Income (Loss) |
$ |
(7,539,222 |
) |
|
$ |
(0.04 |
) |
|
$ |
28,791,605 |
|
|
$ |
0.15 |
|
|
$ |
75,085,891 |
|
|
$ |
0.49 |
|
|
$ |
53,968,162 |
|
|
$ |
0.28 |
|
|
$ |
124,142,356 |
|
|
$ |
0.92 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Share-based compensation |
|
2,170,735 |
|
|
|
0.01 |
|
|
|
2,260,312 |
|
|
|
0.01 |
|
|
|
1,543,033 |
|
|
|
0.01 |
|
|
|
6,374,743 |
|
|
|
0.03 |
|
|
|
4,964,188 |
|
|
|
0.04 |
|
Unrealized loss (gain) on
change in fair value of derivatives |
|
33,871,957 |
|
|
|
0.17 |
|
|
|
(3,085,065 |
) |
|
|
(0.02 |
) |
|
|
(47,712,305 |
) |
|
|
(0.32 |
) |
|
|
20,653,462 |
|
|
|
0.11 |
|
|
|
(46,391,912 |
) |
|
|
(0.34 |
) |
Transaction costs - executed
A&D |
|
(157,641 |
) |
|
|
— |
|
|
|
220,191 |
|
|
|
— |
|
|
|
1,142,963 |
|
|
|
0.01 |
|
|
|
62,550 |
|
|
|
— |
|
|
|
1,142,963 |
|
|
|
0.01 |
|
Tax impact on adjusted
items |
|
(2,059,802 |
) |
|
|
(0.01 |
) |
|
|
(171,282 |
) |
|
|
— |
|
|
|
2,447,351 |
|
|
|
0.02 |
|
|
|
(1,752,617 |
) |
|
|
(0.01 |
) |
|
|
1,817,876 |
|
|
|
0.01 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted Net
Income |
$ |
26,286,027 |
|
|
$ |
0.13 |
|
|
$ |
28,015,761 |
|
|
$ |
0.14 |
|
|
$ |
32,506,933 |
|
|
$ |
0.21 |
|
|
$ |
79,306,300 |
|
|
$ |
0.41 |
|
|
$ |
85,675,471 |
|
|
$ |
0.64 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted Weighted-Average
Shares Outstanding |
|
195,361,476 |
|
|
|
|
|
195,866,533 |
|
|
|
|
|
151,754,995 |
|
|
|
|
|
194,583,215 |
|
|
|
|
|
134,826,275 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted Net Income
per Diluted Share |
$ |
0.13 |
|
|
|
|
$ |
0.14 |
|
|
|
|
$ |
0.21 |
|
|
|
|
$ |
0.41 |
|
|
|
|
$ |
0.64 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of Net Income (Loss) to
Adjusted EBITDA
The Company defines “Adjusted EBITDA” as net
income (loss) plus net interest expense, unrealized loss (gain) on
change in fair value of derivatives, ceiling test impairment,
income tax (benefit) expense, depreciation, depletion and
amortization, asset retirement obligation accretion, transaction
costs for executed acquisitions and divestitures (A&D),
share-based compensation, loss (gain) on disposal of assets, and
backing out the effect of other income. Company management believes
Adjusted EBITDA is relevant and useful because it helps investors
understand Ring’s operating performance and makes it easier to
compare its results with those of other companies that have
different financing, capital and tax structures. Adjusted EBITDA
should not be considered in isolation from or as a substitute for
net income, as an indication of operating performance or cash flows
from operating activities or as a measure of liquidity. Adjusted
EBITDA, as Ring calculates it, may not be comparable to Adjusted
EBITDA measures reported by other companies. In addition, Adjusted
EBITDA does not represent funds available for discretionary
use.
|
(Unaudited for All Periods) |
|
Three Months Ended |
|
Nine Months Ended |
|
September 30, |
|
June 30, |
|
September 30, |
|
September 30, |
|
September 30, |
|
|
2023 |
|
|
|
2023 |
|
|
|
2022 |
|
|
|
2023 |
|
|
|
2022 |
|
Net Income
(Loss) |
$ |
(7,539,222 |
) |
|
$ |
28,791,605 |
|
|
$ |
75,085,891 |
|
|
$ |
53,968,162 |
|
|
$ |
124,142,356 |
|
|
|
|
|
|
|
|
|
|
|
Interest expense, net |
|
11,301,328 |
|
|
|
10,471,062 |
|
|
|
7,021,381 |
|
|
|
32,162,669 |
|
|
|
13,699,041 |
|
Unrealized loss (gain) on change in fair value of derivatives |
|
33,871,957 |
|
|
|
(3,085,065 |
) |
|
|
(47,712,305 |
) |
|
|
20,653,462 |
|
|
|
(46,391,912 |
) |
Income tax (benefit) expense |
|
(3,411,336 |
) |
|
|
(6,356,295 |
) |
|
|
4,315,783 |
|
|
|
(7,737,688 |
) |
|
|
5,866,744 |
|
Depreciation, depletion and amortization |
|
21,989,034 |
|
|
|
20,792,932 |
|
|
|
14,324,502 |
|
|
|
64,053,637 |
|
|
|
34,854,993 |
|
Asset retirement obligation accretion |
|
354,175 |
|
|
|
353,878 |
|
|
|
243,140 |
|
|
|
1,073,900 |
|
|
|
617,685 |
|
Transaction costs - executed A&D |
|
(157,641 |
) |
|
|
220,191 |
|
|
|
1,142,963 |
|
|
|
62,550 |
|
|
|
1,142,963 |
|
Share-based compensation |
|
2,170,735 |
|
|
|
2,260,312 |
|
|
|
1,543,033 |
|
|
|
6,374,743 |
|
|
|
4,964,188 |
|
Loss (gain) on disposal of assets |
|
— |
|
|
|
132,109 |
|
|
|
— |
|
|
|
132,109 |
|
|
|
— |
|
Other income |
|
— |
|
|
|
(116,610 |
) |
|
|
— |
|
|
|
(126,210 |
) |
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
Adjusted
EBITDA |
$ |
58,579,030 |
|
|
$ |
53,464,119 |
|
|
$ |
55,964,388 |
|
|
$ |
170,617,334 |
|
|
$ |
138,896,058 |
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA
Margin |
|
63 |
% |
|
|
67 |
% |
|
|
59 |
% |
|
|
65 |
% |
|
|
56 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliations of Net Cash Provided by
Operating Activities to Adjusted Free Cash Flow and Adjusted EBITDA
to Adjusted Free Cash Flow
The Company defines “Adjusted Free Cash Flow” or
“AFCF” as Net Cash Provided by Operating Activities less changes in
operating assets and liabilities (as reflected on our statements of
cash flows); plus transaction costs for executed acquisitions and
divestitures; current tax expense (benefit); proceeds from
divestitures of equipment for oil and natural gas properties; loss
(gain) on disposal of assets; and less capital expenditures; bad
debt expense; and other income. For this purpose, our definition of
capital expenditures includes costs incurred related to oil and
natural gas properties (such as drilling and infrastructure costs
and the lease maintenance costs) but excludes acquisition costs of
oil and gas properties from third parties that are not included in
our capital expenditures guidance provided to investors. Our
management believes that Adjusted Free Cash Flow is an important
financial performance measure for use in evaluating the performance
and efficiency of our current operating activities after the impact
of accrued capital expenditures and net interest expense and
without being impacted by items such as changes associated with
working capital, which can vary substantially from one period to
another. Other companies may use different definitions of Adjusted
Free Cash Flow.
|
(Unaudited for All Periods) |
|
Three Months Ended |
|
Nine Months Ended |
|
September 30, |
|
June 30, |
|
September 30, |
|
September 30, |
|
September 30, |
|
|
2023 |
|
|
|
2023 |
|
|
|
2022 |
|
|
|
2023 |
|
|
|
2022 |
|
|
|
|
|
|
|
|
|
|
|
Net Cash Provided by
Operating Activities |
$ |
55,390,975 |
|
|
$ |
43,366,181 |
|
|
$ |
68,172,808 |
|
|
$ |
142,437,252 |
|
|
$ |
133,335,223 |
|
Adjustments - Condensed
Statements of Cash Flows |
|
|
|
|
|
|
|
|
|
Changes in operating assets and liabilities |
|
(6,843,290 |
) |
|
|
589,695 |
|
|
|
(19,314,427 |
) |
|
|
(574,197 |
) |
|
|
(7,834,284 |
) |
Transaction costs - executed A&D |
|
(157,641 |
) |
|
|
220,191 |
|
|
|
1,142,963 |
|
|
|
62,550 |
|
|
|
1,142,963 |
|
Income tax expense (benefit) - current |
|
165,780 |
|
|
|
41,191 |
|
|
|
36,736 |
|
|
|
264,261 |
|
|
|
36,736 |
|
Capital expenditures |
|
(42,398,484 |
) |
|
|
(31,608,483 |
) |
|
|
(40,295,388 |
) |
|
|
(113,152,655 |
) |
|
|
(110,245,399 |
) |
Proceeds from divestiture of equipment for oil and natural gas
properties |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
54,558 |
|
|
|
25,066 |
|
Bad debt expense |
|
(19,656 |
) |
|
|
(19,315 |
) |
|
|
— |
|
|
|
(41,865 |
) |
|
|
— |
|
Loss (gain) on disposal of assets |
|
— |
|
|
|
132,109 |
|
|
|
— |
|
|
|
132,109 |
|
|
|
— |
|
Other income |
|
— |
|
|
|
(116,610 |
) |
|
|
— |
|
|
|
(126,210 |
) |
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
Adjusted Free Cash
Flow |
$ |
6,137,684 |
|
|
$ |
12,604,959 |
|
|
$ |
9,742,692 |
|
|
$ |
29,055,803 |
|
|
$ |
16,460,305 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Unaudited for All Periods) |
|
Three Months Ended |
|
Nine Months Ended |
|
September 30, |
|
June 30, |
|
September 30, |
|
September 30, |
|
September 30, |
|
|
2023 |
|
|
|
2023 |
|
|
|
2022 |
|
|
|
2023 |
|
|
|
2022 |
|
|
|
|
|
|
|
|
|
|
|
Adjusted
EBITDA |
$ |
58,579,030 |
|
|
$ |
53,464,119 |
|
|
$ |
55,964,388 |
|
|
$ |
170,617,334 |
|
|
$ |
138,896,058 |
|
|
|
|
|
|
|
|
|
|
|
Net interest expense (excluding amortization of deferred financing
costs) |
|
(10,042,862 |
) |
|
|
(9,250,677 |
) |
|
|
(5,926,308 |
) |
|
|
(28,463,434 |
) |
|
|
(12,215,420 |
) |
Capital expenditures |
|
(42,398,484 |
) |
|
|
(31,608,483 |
) |
|
|
(40,295,388 |
) |
|
|
(113,152,655 |
) |
|
|
(110,245,399 |
) |
Proceeds from divestiture of equipment for oil and natural gas
properties |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
54,558 |
|
|
|
25,066 |
|
|
|
|
|
|
|
|
|
|
|
Adjusted Free Cash
Flow |
$ |
6,137,684 |
|
|
$ |
12,604,959 |
|
|
$ |
9,742,692 |
|
|
$ |
29,055,803 |
|
|
$ |
16,460,305 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of Net
Cash Provided by Operating Activities to Adjusted Cash Flow from
Operations
The Company defines “Adjusted Cash Flow from
Operations” or “ACFFO” as Net Cash Provided by Operating
Activities, per the Condensed Statements of Cash Flows, less the
changes in operating assets and liabilities, including accounts
receivable, inventory, prepaid expenses and other assets, accounts
payable, and settlement of asset retirement obligation, which are
subject to variation due to the nature of the Company’s operations.
Accordingly, the Company believes this non-GAAP measure is useful
to investors because it is used often in its industry and allows
investors to compare this metric to other companies in its peer
group as well as the E&P sector.
|
(Unaudited for All Periods) |
|
Three Months Ended |
|
Nine Months Ended |
|
September 30, |
|
June 30, |
|
September 30, |
|
September 30, |
|
September 30, |
|
|
2023 |
|
|
|
2023 |
|
|
2022 |
|
|
|
2023 |
|
|
|
2022 |
|
|
|
|
|
|
|
|
|
|
|
Net Cash Provided by
Operating Activities |
$ |
55,390,975 |
|
|
$ |
43,366,181 |
|
$ |
68,172,808 |
|
|
$ |
142,437,252 |
|
|
$ |
133,335,223 |
|
|
|
|
|
|
|
|
|
|
|
Changes in operating assets
and liabilities |
|
(6,843,290 |
) |
|
|
589,695 |
|
|
(19,314,426 |
) |
|
|
(574,197 |
) |
|
|
(7,834,284 |
) |
|
|
|
|
|
|
|
|
|
|
Adjusted Cash Flow
from Operations |
$ |
48,547,685 |
|
|
$ |
43,955,876 |
|
$ |
48,858,382 |
|
|
$ |
141,863,055 |
|
|
$ |
125,500,939 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of General and
Administrative Expense (G&A) to G&A Excluding Share-Based
Compensation and Transaction Costs
The following table presents a reconciliation of
General and Administrative Expense (G&A), a GAAP measure, to
G&A excluding share-based compensation, and G&A excluding
share-based compensation and transaction costs.
|
(Unaudited for All Periods) |
|
Three Months Ended |
|
Nine Months Ended |
|
September 30, |
|
June 30, |
|
September 30, |
|
September 30, |
|
September 30, |
|
|
2023 |
|
|
|
2023 |
|
|
2022 |
|
|
2023 |
|
|
2022 |
|
|
|
|
|
|
|
|
|
|
General and
administrative expense (G&A) |
$ |
7,083,574 |
|
|
$ |
6,810,243 |
|
$ |
7,393,848 |
|
$ |
21,023,956 |
|
$ |
18,748,427 |
Shared-based compensation |
|
2,170,735 |
|
|
|
2,260,312 |
|
|
1,543,033 |
|
|
6,374,743 |
|
|
4,964,188 |
G&A excluding
share-based compensation |
|
4,912,839 |
|
|
|
4,549,931 |
|
|
5,850,815 |
|
|
14,649,213 |
|
|
13,784,239 |
Transaction costs - executed
A&D |
|
(157,641 |
) |
|
|
220,191 |
|
|
1,142,963 |
|
|
62,550 |
|
|
1,142,963 |
G&A excluding
share-based compensation and transaction costs |
$ |
5,070,480 |
|
|
$ |
4,329,740 |
|
$ |
4,707,852 |
|
$ |
14,586,663 |
|
$ |
12,641,276 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Calculation of Leverage
Ratio
“Leverage” or the “Leverage Ratio” is calculated
under our existing senior revolving credit facility and means as of
any date, the ratio of (i) our consolidated total debt as of such
date to (ii) our Consolidated EBITDAX for the four consecutive
fiscal quarters ending on or immediately prior to such date for
which financial statements are required to have been delivered
under our existing senior revolving credit facility; provided that
for the purposes of the definition of ‘Leverage Ratio’, (a) for the
fiscal quarter ended September 30, 2022, Consolidated EBITDAX is
calculated by multiplying Consolidated EBITDAX for such fiscal
quarter by four, (b) for the fiscal quarter ended December 31,
2022, Consolidated EBITDAX is calculated by multiplying
Consolidated EBITDAX for the two fiscal quarter period ended on
December 31, 2022 by two, (c) for the fiscal quarter ended March
31, 2023, Consolidated EBITDAX is calculated by multiplying
Consolidated EBITDAX for the three fiscal quarter period ended on
March 31, 2023 by four-thirds, and (d) for each fiscal quarter
thereafter, Consolidated EBITDAX will be calculated by adding
Consolidated EBITDAX for the four consecutive fiscal quarters
ending on such date.
The Company defines “Consolidated EBITDAX” in
accordance with our existing senior revolving credit facility and
it means for any period an amount equal to the sum of (i)
consolidated net income (loss) for such period plus (ii) to the
extent deducted in determining consolidated net income for such
period, and without duplication, (A) consolidated interest expense,
(B) income tax expense determined on a consolidated basis in
accordance with GAAP, (C) depreciation, depletion and amortization
determined on a consolidated basis in accordance with GAAP, (D)
exploration expenses determined on a consolidated basis in
accordance with GAAP, and (E) all other non-cash charges acceptable
to our senior revolving credit facility administrative agent
determined on a consolidated basis in accordance with GAAP, in each
case for such period minus (iii) all noncash income added to
consolidated net income (loss) for such period; provided that, for
purposes of calculating compliance with the financial covenants set
forth in our senior revolving credit facility, to the extent that
during such period we shall have consummated an acquisition
permitted by the senior revolving credit facility or any sale,
transfer or other disposition of any person, business, property or
assets permitted by the senior revolving credit facility,
Consolidated EBITDAX will be calculated on a pro forma basis with
respect to such person, business, property or assets so acquired or
disposed of.
Also set forth in our existing senior revolving
credit facility is the maximum permitted Leverage Ratio of 3.00.
The following table shows the leverage ratio calculation for the
Company’s most recent fiscal quarter.
|
(Unaudited) |
|
Three Months Ended |
|
|
|
December 31, |
|
March 31, |
|
June 30, |
|
September 30, |
|
Last Four Quarters |
|
|
2022 |
|
|
|
2023 |
|
|
|
2023 |
|
|
|
2023 |
|
|
Consolidated EBITDAX
Calculation: |
|
|
|
|
|
|
|
|
|
Net Income (Loss) |
$ |
14,492,669 |
|
|
$ |
32,715,779 |
|
|
$ |
28,791,605 |
|
|
$ |
(7,539,222 |
) |
|
$ |
68,460,831 |
|
Plus: Interest expense |
|
9,468,688 |
|
|
|
10,390,279 |
|
|
|
10,471,062 |
|
|
|
11,301,328 |
|
|
|
41,631,357 |
|
Plus: Income tax provision
(benefit) |
|
2,541,980 |
|
|
|
2,029,943 |
|
|
|
(6,356,295 |
) |
|
|
(3,411,336 |
) |
|
|
(5,195,708 |
) |
Plus: Depreciation, depletion
and amortization |
|
20,885,774 |
|
|
|
21,271,671 |
|
|
|
20,792,932 |
|
|
|
21,989,034 |
|
|
|
84,939,411 |
|
Plus: non-cash charges
acceptable to Administrative Agent |
|
7,962,406 |
|
|
|
(7,823,887 |
) |
|
|
(470,875 |
) |
|
|
36,396,867 |
|
|
|
36,064,511 |
|
Consolidated
EBITDAX |
$ |
55,351,517 |
|
|
$ |
58,583,785 |
|
|
$ |
53,228,429 |
|
|
$ |
58,736,671 |
|
|
$ |
225,900,402 |
|
Plus: Pro Forma Acquired
Consolidated EBITDAX |
$ |
8,086,135 |
|
|
$ |
15,385,792 |
|
|
$ |
9,542,529 |
|
|
$ |
4,810,123 |
|
|
$ |
37,824,579 |
|
Less: Pro Forma Divested
Consolidated EBITDAX |
|
(974,021 |
) |
|
|
(1,166,607 |
) |
|
|
(223,947 |
) |
|
|
(341,098 |
) |
|
$ |
(2,705,673 |
) |
Pro Forma Consolidated
EBITDAX |
$ |
62,463,631 |
|
|
$ |
72,802,970 |
|
|
$ |
62,547,011 |
|
|
$ |
63,205,696 |
|
|
$ |
261,019,308 |
|
|
|
|
|
|
|
|
|
|
|
Non-cash charges acceptable to
Administrative Agent |
|
|
|
|
|
|
|
|
|
Asset retirement obligation
accretion |
$ |
365,747 |
|
|
$ |
365,847 |
|
|
$ |
353,878 |
|
|
$ |
354,175 |
|
|
|
Unrealized loss (gain) on
derivative assets |
|
5,398,615 |
|
|
|
(10,133,430 |
) |
|
|
(3,085,065 |
) |
|
|
33,871,957 |
|
|
|
Share-based compensation |
|
2,198,044 |
|
|
|
1,943,696 |
|
|
|
2,260,312 |
|
|
|
2,170,735 |
|
|
|
Total non-cash charges
acceptable to Administrative Agent |
$ |
7,962,406 |
|
|
$ |
(7,823,887 |
) |
|
$ |
(470,875 |
) |
|
$ |
36,396,867 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As of |
|
|
|
|
|
|
|
|
|
September 30, |
|
Corresponding |
|
|
|
|
|
|
|
|
2023 |
|
|
Leverage Ratio |
|
|
|
|
|
|
Leverage Ratio Covenant: |
|
|
|
|
|
|
|
|
|
Revolving line of credit |
$ |
428,000,000 |
|
|
|
1.64 |
|
|
|
|
|
|
|
Estimated Founders deferred
payment(1) |
|
11,906,300 |
|
|
|
0.05 |
|
|
|
|
|
|
|
Consolidated Total Debt |
$ |
439,906,300 |
|
|
|
1.69 |
|
|
|
|
|
|
|
Pro Forma Consolidated
EBITDAX |
|
261,019,308 |
|
|
|
|
|
|
|
|
|
Leverage
Ratio |
|
1.69 |
|
|
|
|
|
|
|
|
|
Maximum Allowed |
≤ 3.00 |
x |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) Estimated post close
adjustment subject to review. |
|
|
|
|
|
|
|
|
|
1A non-GAAP financial measure; see “Non-GAAP Financial
Information” section in this release for more information including
reconciliations to the most comparable GAAP measures.2 Refer to the
“Non-GAAP Information” section in this release for calculation of
the Leverage Ratio based on our Credit Agreement. The Leverage
Ratio of 1.69x includes an estimated $11.9 million deferred cash
payment due in December 2023 for the Founders Acquisition, which is
$15.0 million less anticipated purchase price adjustments.
Excluding the deferred payment in the calculation results in a
Leverage Ratio of 1.64x.
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