Ring Energy exceeds Q1 expectations, focuses on growth By Investing.com

In the first quarter of 2024, Inc. (REI) reported strong performance with sales volumes surpassing guidance and operational costs coming in under budget.

The company’s adjusted net income reached $20.3 million, with adjusted EBITDA at $62 million. Ring Energy’s production strategy and balance sheet improvement were key focal points, as it drilled 11 new wells and paid down debt, enhancing its liquidity position.

The outlook for the second quarter remains positive, with expected production increases and continued financial discipline.

Key Takeaways

• Ring Energy’s sales volumes exceeded guidance, with 13,394 barrels of oil per day and 19,034 barrels of oil equivalent per day.
• The company reported a lower-than-expected lease operating expense (LOE) per BOE, thanks to cost reduction efforts.
• Adjusted net income stood at $20.3 million, with adjusted EBITDA reaching $62 million.
• Ring Energy plans to maintain a phased drilling program, targeting an average of 5 horizontal and 6 vertical wells per quarter.
• Liquidity improved with a $3 million debt reduction and $179.3 million available in liquidity.
• The company’s strategy includes improving the balance sheet and delivering meaningful returns to shareholders.

Company Outlook

• Production for Q2 is projected to be between 18,500 and 19,100 BOE per day.
• Full-year 2024 guidance remains unchanged with expected sales of 12,500 to 13,300 barrels per day.
• Full-year development program budget is set at $135 million to $175 million, with Q2 CapEx estimated between $37 million and $42 million.
• Full-year 2024 LOE is anticipated to be $10.50 to $11.50 per BOE.

Bearish Highlights

• In the Penwell area, the company is still addressing saltwater disposal issues before it can accelerate drilling.

Bullish Highlights

• The company successfully drilled 11 producing wells in Q1, aligning with the high end of their guidance.
• Approximately 43% of estimated oil sales and 41% of estimated sales are hedged for the remaining three quarters of 2024.

Misses

• There were no significant misses reported in the earnings call.

Q&A Highlights

• CEO Paul McKinney highlighted M&A opportunities in the Central Basin Platform and the Northwest shelf, expressing excitement over potential acquisitions.
• The company is focused on expanding in the P.J. Lea and Penwell areas, with all constraints lifted in P.J. Lea for accelerated drilling.
• Ring Energy is cautious about adding more wells…