Ring Energy, Inc. · AMEX:REI
Ring Energy — Q2 2022 Earnings Presentation
35 slides from Ring Energy's earnings presentation, Aug 9, 2022
Slide 1: Value Focused Proven Strategy
www. ringenergy.com NYSE American: REI VALUE FOCUSED PROVEN STRATEGY
Slide 2: Forward-Looking Statements and Cautionary Note Regarding Hydrocarbon Disclosures
www.ringenergy.com NYSE American: REI Forward - Looking Statements and Cautionary Note Regarding Hydrocarbon Disclosures 2 Forward – Looking Statements This Presentation includes "forward - looking statements" within the meaning of the Private Securities Litigation Reform Act of 19 95, Section 27A o
Slide 3: Ring Energy – Independent Oil & Gas Company Focused on Conventional Permian Assets
www.ringenergy.com NYSE American: REI Ring Energy – Independent Oil & Gas Company Currently Focused on Conventional Permian Assets in Texas & New Mexico 3 2021 SEC Proved Reserves 2,3 77.8 MMBoe/PV10 $1,332MM 85% Oil Gross / Net Acres 2 83,604 / 64,380 1. Based on Q2’22 financials 2. As of December
Slide 4: Q2 2022 Highlights
www.ringenergy.com NYSE American: REI Q2 2022 Highlights Executing our Strategy 4 ▪ Record quarterly sales revenue of $85.0 MM – highest in Company history ▪ Sales volumes at the higher end of Ring’s guidance range of 9,000 to 9,400 Boe /d, increased full year production guidance ▪ Adjusted EBITDA g
Slide 5: Committed to ESG
www.ringenergy.com NYSE American: REI Committed to ESG Issued Inaugural ESG Report in Q4 2021 5
Slide 6: Proven Strategy Leads to Shareholder Value
www.ringenergy.com NYSE American: REI 1 Rig Continuous to Drill 25 - 33 Wells YTD Placed on production 16 Hz’s wells 3 compared to 13 in FY21 Significant Increase in Adjusted EBITDA 1H22 EBITDA ~ $82.9 million nearly matches FY21 1 Target Growth 9,300 - 9,700 Boepd (86% oil) 9 - 14% growth over FY21
Slide 7: Asset Areas
Asset Areas
Slide 8: Proven, Conventional, Top Tier Returns
www.ringenergy.com NYSE American: REI Proven, Conventional, Top Tier Returns San Andres Hz Delaware Hz Midland Hz High ROR Oil Play x x x Low D&C Costs x Lower 1 st Year Decline x Low Lease Acquisition Cost x Long life wells x Oil IPs >750 Bbl /d x x Multiple Benches x x > 85% Oil x $25 - 30/ Bbl D&
Slide 9: Northwest Shelf Asset Area
www.ringenergy.com NYSE American: REI ▪ Meaningful inventory of horizontal drilling locations ▪ Actively developing asset ▪ Low D&C and LOE costs drive strong economics ▪ Improving drilling efficiencies: ▪ 1 mile HZ well drill time spud to rig release and move to next location 7 - 9 days ▪ 1.5 mile
Slide 10: NWS HZ Well Performance & Costs
www.ringenergy.com NYSE American: REI 1,000 10,000 100,000 0 180 360 2016 & 2017 2018 2019,2020 & 2021 Months 6 12 BOE (85 - 90% Oil) NWS HZ Well Performance & Costs Significant Improvements Driving Top Tier Returns 10 D&C Cost Range per Year ( 1 Mile Lateral ) 1 NWS HZ Performance Average – Cum BOE
Slide 11: Central Basin Platform Asset Area
www.ringenergy.com NYSE American: REI 2Q22 Avg Sales 3,086 Boe /d (96% Oil) 2Q 22 CTR’s 1 Conversion 2Q22 D&C Drilled 0 wells Gross / Net Acres 1 29,065 / 20,288 Technical Focus Reinvigorates Legacy Area Central Basin Platform Asset Area 11 Ring Acreage Central Basin Platform 1. As of December 31, 2
Slide 12: CBP HZ Well Performance & Costs
www.ringenergy.com NYSE American: REI 1,000 10,000 100,000 BO 2016 - 2020 Average 2021 & 2022 Average 0 Months 6 CBP HZ Well Performance & Costs Technical Improvements to Completion and Landing Zone 12 Annual D&C per HZ Cost Range ( 1.5 Mile ) 1 ~530 Avg ~410 Avg ~420 Avg CBP 1.5 Mile HZ Performance
Slide 13: Maintains Solid PDP Reserve Base that Generates Consistent FCF
www.ringenergy.com NYSE American: REI 0 50 100 150 200 2018 2019 2020 2021 1H 2022 NWS CBP Maintains Solid PDP Reserve Base that Generates Consistent FCF Increases reserves by reducing operating & well repair costs and extending well life ▪ ~50% long - term reduction in LOE ▪ Up to 75% reduction in
Slide 14: Delaware Basin Asset
www.ringenergy.com NYSE American: REI Turnkey Asset with Predictable Cash Flow and Upside Potential Delaware Basin Asset 14 ▪ Sales process for Delaware Assets underway ▪ Truist Securities running a marketed process ▪ Asset infrastructure in - place to enable efficient development ▪ Produced water,
Slide 15: Financials
Financials
Slide 16: Sustainable Value Focused Results
www.ringenergy.com NYSE American: REI Sustainable Value Focused Results 8,709 8,243 9,153 8,870 9,341 0 1,000 2,000 3,000 4,000 5,000 6,000 7,000 8,000 9,000 10,000 Q2 2021 Q3 2021 Q4 2021 Q1 2022 Q2 2022 Boe /d Net Sales $7.3 $6.8 $9.9 $22.3 $31.3 $0.0 $5.0 $10.0 $15.0 $20.0 $25.0 $30.0 $35.0 Q2 20
Slide 17: Historical Metrics Quarterly Analysis of FCF
www.ringenergy.com NYSE American: REI Historical Metrics Quarterly Analysis of FCF 1 $MM Q2 2021 Q3 2021 Q4 2021 Q1 2022 Q2 2022 Adj EBITDA 1 $20.6 $19.7 $24.0 $35.6 $47.4 Capital - $11.5 - $13.7 - $11.3 - $19.7 - $41.8 Interest Exp. 2 - $3.5 - $3.4 - $3.4 - $3.2 - $3.1 Free Cash Flow 1 $5.6 $2.6 $9
Slide 18: Reducing Debt & Increasing Liquidity
www.ringenergy.com NYSE American: REI $375.0 $360.0 $313.0 $305.5 $300.5 $295.0 $290.0 $280.0 $270.0 $0.0 $100.0 $200.0 $300.0 $400.0 Q2 2020 Q3 2020 Q4 2020 Q1 2021 Q2 2021 Q3 2021 Q4 2021 Q1 2022 Q2 2022 RBL Balance $313 MM outstanding debt with $36 MM in Surplus Cash Reducing Debt & Increasing Li
Slide 19: Value Proposition 2022 and Beyond
www.ringenergy.com NYSE American: REI Value Proposition 2022 and Beyond 19 Positioned for Substantial Increase in Revenue and FCF Achieving High - Return Organic Growth Pursuing Acquisition Opportunities to Further Increase Scale and Lower Break - Even Costs
Slide 20: Stronghold Energy II Acquisition Overview
Stronghold Energy II Acquisition Overview
Slide 21: Ring + Stronghold Overview
www.ringenergy.com NYSE American: REI Ring + Stronghold Overview 21 1. Assume preferred equity converts to common equity upon successful shareholder vote 2. Represents a non - GAAP financial measure that should not be considered a substitute for any GAAP measure. See Non - GAAP Information 3. Proved
Slide 22: Transformational Transaction
www.ringenergy.com NYSE American: REI Transformational Transaction 22 High - quality , conventional , Proved Developed Producing asset base with high margins and low decline rates Attractive cash flow profile with low breakeven drilling economics and low operating costs Significant asset development
Slide 23: Transaction Logistics & Governance
www.ringenergy.com NYSE American: REI Transaction Logistics & Governance 23 Approvals and Timing ▪ Unanimously approved by Ring Board of Directors ▪ Subject to customary closing conditions, including regulatory approvals ▪ Transaction effective date is June 1, 2022 ▪ Anticipated closing targeted for
Slide 24: Appendix
Appendix
Slide 25: 2022 Guidance
www.ringenergy.com NYSE American: REI 82% 13% 5% D,C&E CTRs/Recomp/Cap Workovers Land/Other CAPEX Allocation Mid Point $130 million 2022 Guidance Grow Production, Generate FCF, Pay Down Debt 25 Sales Volumes Q3 2022 FY 2022 Total ( Boe /d) 9,500 – 9,900 9,300 – 9,700 Oil (Bo/d) 8,200 – 8,600 8,000 –
Slide 26: SEC Proved Reserves Year-End 2021
www.ringenergy.com NYSE American: REI PD 60% PUD 40% 1P Summary Reserve Category Net Oil, MBbl Net Gas, MMcf Net MBOE Net Capex 2 , $MM PV - 10 3 , $MM PD 36,821 39,749 43,446 $55 $794 PUD 29,018 32,025 34,355 $293 $538 TOTAL 65,839 71,774 77,801 $348 $1,332 SEC Proved Reserves 1 Year - End 2021 202
Slide 27: Financial Overview Oil Hedge Summary
www.ringenergy.com NYSE American: REI Financial Overview Oil Hedge Summary Summary of Crude Oil Hedges 27 1) The notional quantity per the swap contract entered into May 11, 2021 is for 26,750 barrels of oil per month. The 879 represe nts the daily amount on an annual basis Average Weighted Avg. Str
Slide 28: Income Statement and Operational Stats
www.ringenergy.com NYSE American: REI Income Statement and Operational Stats Income Statement Operational Stats 28 June 30, March 31, June 30, 2022 2022 2021 2022 2021 Oil and Natural Gas Revenues $ 84,961,875 $ 68,181,032 $ 47,760,102 $ 153,142,907 $ 87,262,634 Costs and Operating Expenses Lease op
Slide 29: Balance Sheet and Cash Flow Statement
www.ringenergy.com NYSE American: REI Balance Sheet and Cash Flow Statement Balance Sheet Cash Flow Statement 29 ASSETS Current Assets Cash and cash equivalents $ 2,223,289 $ 2,408,316 Accounts receivable 39,496,928 24,026,807 Joint interest billing receivable 1,350,134 2,433,811 Derivative assets 1
Slide 30: Non-GAAP Disclosure
www.ringenergy.com NYSE American: REI Non - GAAP Disclosure Certain financial information included in Ring’s financial results are not measures of financial performance recognized by ac cou nting principles generally accepted in the United States, or GAAP. These non - GAAP financial measures are “Ad
Slide 31: Non-GAAP Reconciliations
www.ringenergy.com NYSE American: REI Non - GAAP Reconciliations 31 Net Income (Loss) $ 41,944,422 $ 7,112,043 $ (15,887,159) $ 49,056,465 $ (34,953,252) Share-based compensation 1,899,245 1,521,910 351,775 3,421,155 707,269 Unrealized loss (gain) on change in fair value of derivatives (12,160,246)
Slide 32: Corporate Strategy
www.ringenergy.com NYSE American: REI Corporate Strategy Value Focused for Sustainable Success 32 Attract and Retain Highly Qualified People Pursue Operational Excellence with a Sense of Urgency Invest in High - Margin, High RoR Projects Focus on FCF and Strengthen Balance Sheet Pursue Strategic A&D
Slide 33: Management Team
www.ringenergy.com NYSE American: REI Add Photo Add Photo Add Photo Add Photo Add Photo Paul D. McKinney Chairman & Chief Executive Officer 35+ years of domestic & international oil & gas industry experience Executive & board roles include CEO, President, COO, Region VP and public & private board di
Slide 34: Board of Directors
www.ringenergy.com NYSE American: REI 34 Add Photo Paul D. McKinney Chairman & Chief Executive Officer 35+ years of domestic & international oil & gas industry experience Executive & board roles include CEO, President, COO, Region VP and public & private board directorships Anthony D. Petrelli Lead
Slide 35: Analyst Coverage and Company Contact
ANALYST COVERAGE Alliance Global Partners (A.G.P.) Jeff Campbell (203) 577 - 5427 jcampbell@allianceg.com Tuohy Brothers Investment Noel Parks (215) 913 - 7320 nparks@tuohybrothers.com ROTH Capital Partners John M. White (949) 720 - 7115 jwhite@roth.com Truist Financial Neal Dingmann (713) 247 - 900