News Column

Ring Energy Announces Second Quarter and Six Month 2014 Financial and Operating Results

August 8, 2014

88% Increase In Revenue Over First Quarter

142% Increase In Earnings Over First Quarter

83% Increase In Production Over First Quarter



MIDLAND, Texas--(BUSINESS WIRE)-- Ring Energy, Inc. (NYSE MKT: REI) (“Ring”) (“Company”) announced today financial results for the three months and six months ended June 30, 2014. For the three month period ended June 30, 2014, Ring had oil and gas revenues of $11,204,238, compared to $1,291,579 for the quarter ended June 30, 2013, a 767% increase and net income of $2,821,738 or $0.11 per fully diluted share, compared to a net loss of $890,393, or $0.06 per fully diluted share, for the same period in 2013. Compared to the first quarter ended March 31, 2014, Ring had an 88% increase in oil and gas revenues and a 142% increase in earnings. For the six month period ended June 30, 2014, the Company reported oil and gas revenues of $17,174,690, compared to oil and gas revenues of $2,443,536 for the six month period ended June 30, 2013, a 603% increase. Net income for the six month period ended June 30, 2014 was $3,985,427, or $0.16 per fully diluted share, compared to a net loss of $1,855,673, or $0.13 per fully diluted share, for the same period in 2013.

The revenue increase was a result of increases in production volumes due to increased development activity. For the three months ended June 30, 2014, oil sales volume increased to 118,533 barrels, compared to 14,261 barrels for the same period in 2013, a 731% increase, and gas sales volume increased to 7,142 MCF (thousand cubic feet), compared to 7,092 MCF for the same period in 2013, a .7% increase. For the six months ended June 30, 2014, oil sales volume increased to 182,477 barrels, compared to 28,506 barrels for the same period in 2013, a 540% increase, and gas sales volume increased to 15,759 MCF, compared to 12,849 MCF for the same period in 2013, a 23% increase. The average commodity prices received by Ring were $93.84 per barrel of oil and $4.98 per MCF of natural gas for the quarter ended June 30, 2014, compared to $89.02 per barrel of oil and $3.10 per MCF of natural gas for the quarter ended June 30, 2013. The average prices received for the six months ended June 30, 2014 were $93.69 per barrel of oil and $4.93 per MCF of natural gas, compared to $84.41 per barrel of oil and $2.91 per MCF of natural gas for the six month period ended June 30, 2013.

Lease operating expenses, including production taxes, for the three months ended June 30, 2014 were $13.32 per barrel of oil equivalent (“BOE”), a 25% decrease from the prior year. Depreciation, depletion and amortization costs increased 13% to $29.05 per BOE. General and administrative costs, which included a $640,101 charge for stock based compensation, were $13.65 per BOE, an 86% decrease. For the six months ended June 30, 2014, lease operating expenses, including production taxes, were $14.27 per BOE, a 7% decrease. Depreciation, depletion and amortization costs were $27.06 per BOE, a 12% increase, and general and administrative costs, which included a $1,299,569 charge for stock based compensation, were $17.28 per BOE, a 83% decrease.

There was no outstanding debt on the Company’s $150 million senior secured credit facility at July 1, 2014.

Net cash flow from operations for the three and six months ended June 30, 2014 was $8,614,602, or $0.34 per fully diluted share, and $12,633,000, or $0.51 per fully diluted share, compared to net cash flow of $404,051, or $0.03, and $609,595, or $0.04 per fully diluted share for the same periods in 2013 (1).

In June, the Company received approximately $28.7 million in net proceeds from the private sale of approximately 2,000,000 shares of the Company’s restricted common stock. Also in June, the Company’s common stock became part of the Russell 2000 Index.

Ring’s Chief Executive Officer, Mr. Kelly Hoffman, stated, “Despite some weather and power outage disruptions in the first quarter, we were able to successfully continue our overall development program in the second quarter, with particular emphasis on our Permian Basin properties. We drilled 36 new development wells and continued infrastructure improvements, as well as stepping up our leasing activity. Our second quarter production of 119,000 BOEs was a 675% increase over the same period in 2013 and over an 83% increase from the first quarter. We completed a $30 million private placement of our common stock which has provided sufficient CAPEX funding, based on our current budget, into 2015. We are in discussions with pipeline companies to start delivering a portion of our production directly into pipeline, and we are continuing to look at acquisition opportunities, primarily concentrating on those that compliment our existing properties.”

Non-GAAP Financial Measures:

Earnings for the three months ended June 30, 2014 include a non-cash charge for stock based compensation of $640,101. Earnings for the six months ended June 30, 2014 include a non-cash charge for stock based compensation of $1,299,569. Excluding such items, the Company’s earnings would have been $0.13 per diluted share for the three months ended June 30, 2014, and $0.19 for the six months ended June 30, 2014. The Company believes results excluding these items 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.

(1) Cash Flow from Operations is a non-GAAP financial measure that represents “Net Cash Provided By Operating Activities” adjusted for the change in operating assets and liabilities. See below for a reconciliation of the related amounts.

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, 2013, its Form 10-Q for the quarter ended June 30, 2014 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

Six Months Ended

June 30,

June 30,

2014201320142013

(Unaudited)

(Unaudited)

(Unaudited)

(Unaudited)

 
Oil and Gas Revenues $ 11,204,238       $ 1,291,579   $ 17,174,690       $ 2,443,536  
 
Costs and Operating Expenses
Oil and gas production costs 1,077,878 214,468 1,848,978 355,723
Oil and gas production taxes 517,052 59,459 793,013 112,676
Depreciation, depletion and amortization 3,477,816 396,662 5,008,012 740,270
Accretion expense 37,312 11,824 61,694 23,277
General and administrative expense   1,634,807         1,499,559     3,199,268         3,067,263  
 
Total Costs and Operating Expenses   6,744,865         2,181,972     10,910,965         4,299,209  
 
Other Income (Expense)
Interest income   19,576         -     62,349         -  
 
Net Other Income (Expense)   19,576         -     62,349         -  
 
Income (Loss) Before Provision for Income Taxes 4,478,949 (890,393 ) 6,326,074 (1,855,673 )
 
Income tax provision   (1,657,211 )       -     (2,340,647 )       -  
 
Net Income (Loss) $ 2,821,738         ($890,393 ) $ 3,985,427         ($1,855,673 )
 
Basic Net Income (Loss) Per Common Share $ 0.12 ($0.06 ) $ 0.17 ($0.13 )
Diluted Net Income (Loss) Per Common Share $ 0.11 ($0.06 ) $ 0.16 ($0.13 )
 
 
Basic Weighted-Average Common Shares Outstanding 23,907,651 14,350,284 23,745,406 14,290,060
Diluted Weighted-Average Common Shares Outstanding 25,151,932 14,350,284 24,926,088 14,290,060
 
           
COMPARATIVE OPERATING STATISTICS
     
Three Months Ended June 30,
2014 2013 Change
 
Net Production - BOE per day 1,316 170 674 %
Per BOE:
Average Sales Price $ 93.58 $ 83.64 12 %
 
Operating Costs $ 9.00 $ 13.89 -35 %
DD&A $ 29.05 $ 25.69 13 %
General & Administrative Expenses $ 13.65 $ 97.10 -86 %
 
Six Months Ended June 30,
2014 2013 Change
 
Net Production - BOE per day 1,023 169 505 %
Per BOE:
Average Sales price $ 92.78 $ 79.73 16 %
 
Operating Costs $ 9.99 $ 11.61 -14 %
DD&A $ 27.06 $ 24.15 12 %

General & Administrative Expenses

$ 17.28 $ 100.08 -83 %
 
               
RING ENERGY, INC.
CONSOLIDATED BALANCE SHEET
 

June 30,

December 31,

2014

2013

 
ASSETS
Current Assets
Cash $ 45,535,352 $ 52,350,583
Accounts receivable 4,780,627 3,888,402
Prepaid expenses and retainers   259,096     66,051  
Total Current Assets   50,575,075     56,305,036  
Property and Equipment, Using Full Cost Accounting
Oil and gas properties subject to amortization 107,371,894 58,040,724
Office equipment   497,121     257,911  
Total Property and Equipment 107,869,015 58,298,635
Less: Accumulated depreciation and amortization   (7,888,265 )   (2,880,253 )
Net Property and Equipment   99,980,750     55,418,382  
Total Assets $ 150,555,825   $ 111,723,418  
 
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Accounts payable $ 7,944,774 $ 6,229,490
Other accrued liabilities   709,566     1,002,153  
Total Current Liabilities   8,654,340     7,231,643  
Noncurrent Liabilities
Deferred income taxes 3,044,298 703,651
Asset retirement obligation   2,276,845     1,182,410  
Total Noncurrent Liabilities   5,321,143     1,886,061  
 
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; 25,645,614 shares and 23,576,313 shares outstanding, respectively

25,646 23,576
Additional paid-in capital 139,005,296 109,018,165
Accumulated deficit   (2,450,600 )   (6,436,027 )
Total Stockholders' Equity   136,580,342     102,605,714  
Total Liabilities and Stockholders' Equity $ 150,555,825   $ 111,723,418  
 
 
RING ENERGY, INC.
STATEMENTS OF CASH FLOW
               
Six Months Ended
June 30,
20142013
 
Cash Flows From Operating Activities
Net income $ 3,985,427   ($1,855,673 )

Adjustments to reconcile net income to net cash provided by operating activities:

Depreciation, depletion and amortization 5,008,012 740,270
Accretion expense 61,694 23,277
Share-based compensation 1,299,569 1,701,721
Provision for income taxes 2,340,647 -
Changes in assets and liabilities:
Accounts receivable (892,225 ) (45,956 )
Prepaid expenses (193,045 ) (32,795 )
Accounts payable   1,422,697           839,621  
Net Cash Provided by Operating Activities   13,032,776           1,370,465  
Cash Flows from Investing Activities
Payments to purchase oil and natural gas properties (10,974,396 ) (1,751,342 )
Payments to develop oil and natural gas properties (37,324,033 ) (5,524,201 )
Purchase of office equipment   (239,210 )         (54,441 )
Net Cash Used in Investing Activities   (48,537,639 )         (7,329,984 )
Cash Flows From Financing Activities
Proceeds from option exercise 22,500 -
Proceeds from issuance of common stock   28,667,132           18,987,272  
Net Cash Provided by Financing Activities   28,689,632           18,987,272  
Net Increase in Cash (6,815,231 ) 13,027,753
Cash at Beginning of Period   52,350,583           5,404,167  
Cash at End of Period $ 45,535,352       $   18,431,920  
 
Non-Cash Investing and Financing Activities
Revision of asset retirement obligation estimate $ 211,691
Asset retirement obligation acquired $ 294,772 -
Asset retirement obligation incurred during development   737,969           67,352  
 
RECONCILIATION OF CASH FLOW FROM OPERATIONS
 
Net cash provided by operating activities $ 13,032,776 $ 1,370,465
Change in operating assets and liabilities   (337,427 )         (760,870 )
 
Cash flow from operations $ 12,695,349       $   609,595  

Management believes that the non-GAAP measure of cash flow from operations is useful information for investors because it is used internally and is accepted by the investment community as a means of measuring the Company's ability to fund its capital program. It is also used by professional research analysts in providing investment recommendations pertaining to companies in the oil and gas exploration and production industry.

 
RING ENERGY, INC.
NON-GAAP DISCLOSURE RECONCILIATION
ADJUSTED EBITDA
               
Six Months Ended
June 30, June 30,

2014

2013

 
NET INCOME $ 3,985,427 ($1,855,673 )
 
Interest expense (Income) (62,349 ) -
Income tax expense 2,340,647 -
Depreciation, depletion and amortization 5,008,012 740,270
Accretion expense 61,694 23,277
Share-based compensation   1,299,569     1,701,721  
 
ADJUSTED EBITDA $ 12,633,000   $ 609,595  
 





K M Financial, Inc.

Bill Parsons, 702-489-4447

Source: Ring Energy, Inc.


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