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Water Tower Research is a leading equity research firm that provides research on micro, small and mid cap companies.

Water Tower Research was founded by Wall Street veterans after witnessing a fundamental shift in the investment research industry with the result being a declining knowledge base among investors, a lack of awareness and a shrinking pool of fundamental research being conducted on companies across the small-cap and micro-cap spectrum. The same issues are now increasingly occurring in the mid-cap space. This sea change within the investment community is impacting not only the companies themselves but also current shareholders and potential investors. With significantly less active sell-side sponsorship by Wall Street, a substantial information gap has developed between companies and various constituents in the financial community. The net result is fewer channels for insight and information to flow between companies and investors.

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<ul><li>We are lowering our 3Q24 estimates to reflect lower natural gas price realizations and slightly higher estimated operating costs.</li><li>Ring’s 2Q24 realized natural gas price averaged ($1.93)/Mcf, a ($4.25)/Mcf differential to the NYMEX near-term contract average of $2.32/MMBtu.</li><li>The 3Q24 NYMEX near-term contract average price was $2.23/MMBtu. </li></ul>

We are lowering our 3Q24 estimates to reflect lower natural gas price realizations and slightly higher estimated operating costs.Ring’s 2Q24 realized natural gas price averaged ($1.93)/Mcf, a ($4.25)/Mcf differential to the NYMEX near-term contract average of $2.32/MMBtu.The 3Q24 NYMEX near-term contract average price was $2.23/MMBtu. 

Ring Energy, Inc. - Estimate Housekeeping

<ul><li>Production has benefited this year from new wells that have performed above initial expectations and field-level operational efficiency gains.</li><li>1H24 production averaged 19,410 BOE/d, including 13,509 b/d of oil (70%). Total production in 2Q24 was 19,786 BOE/d, a fresh company record.</li><li>Solid production performance and cost efficiencies allowed management to increase FY24 production guidance and trim capital spending guidance. </li></ul>

Production has benefited this year from new wells that have performed above initial expectations and field-level operational efficiency gains.1H24 production averaged 19,410 BOE/d, including 13,509 b/d of oil (70%). Total production in 2Q24 was 19,786 BOE/d, a fresh company record.Solid production performance and cost efficiencies allowed management to increase FY24 production guidance and trim capital spending guidance. 

Ring Energy, Inc. - Execution Above Initial Expectations

<ul><li>On July 8, 2024, Ring increased its 2Q24 production guidance to 13.5-13.7 MB/d of oil (19.5-19.7 MBOE/d) from 13.0-13.4 MB/d of oil (18.5-19.1 MBOE/d) reflecting the continuation of outperformance exhibited in 1Q24 (Figure 1).</li><li>Production volumes are benefiting from outperformance in Ring’s development program and increased operational efficiencies in the company’s base production.</li><li>The midpoint reflects gains of ~2% Q/Q and 15% Y/Y. The Y/Y gain partially reflects the addition of assets acquired in the Central Basin Platform from August 2023.</li></ul>

On July 8, 2024, Ring increased its 2Q24 production guidance to 13.5-13.7 MB/d of oil (19.5-19.7 MBOE/d) from 13.0-13.4 MB/d of oil (18.5-19.1 MBOE/d) reflecting the continuation of outperformance exhibited in 1Q24 (Figure 1).Production volumes are benefiting from outperformance in Ring’s development program and increased operational efficiencies in the company’s base production.The midpoint reflects gains of ~2% Q/Q and 15% Y/Y. The Y/Y gain partially reflects the addition of assets acquired in the Central Basin Platform from August 2023.

Ring Energy, Inc. - Capital Program and Efficiency Gains Contributing to Production Outperformance

<ul><li>Acquisitions are expected to remain a centerpiece of management’s three-pronged strategy to increase scale in the asset base, reduce outstanding debt, and ultimately position the company to return cash to shareholders.</li><li>The Stronghold acquisition in 3Q22, followed by the Founders acquisition in 3Q23, added operational scale and inventory depth on the southern portion of the Central Basin Platform (CBP).</li><li>Together with Ring’s Northwest Shelf (NWS) assets, the inventory provides a diverse set of horizontal and vertical development opportunities.</li></ul>

Acquisitions are expected to remain a centerpiece of management’s three-pronged strategy to increase scale in the asset base, reduce outstanding debt, and ultimately position the company to return cash to shareholders.The Stronghold acquisition in 3Q22, followed by the Founders acquisition in 3Q23, added operational scale and inventory depth on the southern portion of the Central Basin Platform (CBP).Together with Ring’s Northwest Shelf (NWS) assets, the inventory provides a diverse set of horizontal and vertical development opportunities.

Ring Energy, Inc. - Scaling Business Through Acquisitions & Development

<ul><li>Ring’s 4Q23 production averaged ~19,400 BOE/d, near the high end of management’s 18,900-19,500 BOE/d guidance range.</li><li>Average production increased 11% from 3Q23, reflecting the full-quarter inclusion of  volumes acquired in the Founders acquisition, which closed in August 2023, and from volumes added from the completion of the 2023 development program in the quarter.</li><li>Management expects 1Q24 production to average 18,000-18,500 BOE/d. 1Q24 volumes were adversely affected by winter weather disruptions in January, which deferred ~1,900 BOE/d for 10 days and natural declines from wells completed during 2H23.</li></ul>

Ring’s 4Q23 production averaged ~19,400 BOE/d, near the high end of management’s 18,900-19,500 BOE/d guidance range.Average production increased 11% from 3Q23, reflecting the full-quarter inclusion of  volumes acquired in the Founders acquisition, which closed in August 2023, and from volumes added from the completion of the 2023 development program in the quarter.Management expects 1Q24 production to average 18,000-18,500 BOE/d. 1Q24 volumes were adversely affected by winter weather disruptions in January, which deferred ~1,900 BOE/d for 10 days and natural declines from wells completed during 2H23.

United States

Ring Energy Inc is an independent oil and gas exploration company with headquarters in Midland, Texas. The Company's business strategy is focused on the exploration, development and acquisition of oil and natural gas properties in the Permian and Mid-Continent regions of the United States.

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Ring Energy Inc (REI US)

Ring Energy, Inc. - Estimate Housekeeping

We are lowering our 3Q24 estimates to reflect lower natural gas price realizations and slightly higher estimated operating costs.

Water Tower Research

Ring Energy, Inc. - Execution Above Initial Expectations

Production has benefited this year from new wells that have performed above initial expectations and field-level operational efficiency gains.

Water Tower Research

Ring Energy, Inc. - Capital Program and Efficiency Gains Contributing to Production Outperformance

The midpoint reflects gains of ~2% Q/Q and 15% Y/Y. The Y/Y gain partially reflects the addition of assets acquired in the Central Basin Platform...

Water Tower Research

Ring Energy, Inc. - Scaling Business Through Acquisitions & Development

Acquisitions are expected to remain a centerpiece of management’s three-pronged strategy to increase scale in the asset base, reduce outstanding debt

Water Tower Research

Ring Energy, Inc. - Estimate Update

Ring’s 4Q23 production averaged ~19,400 BOE/d, near the high end of management’s 18,900-19,500 BOE/d guidance range. Average production increased...

Water Tower Research

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