• Total Sales Growth: 8% increase over 2023 to 19,648 barrels of oil per day.
• Oil Sales Growth: 6% increase to 13,283 barrels of oil per day.
• All-in Cash Operating Costs: Reduced by 2% year-over-year on a per Boe basis.
• Capital Expenditure: $151.9 million for the year, including drilling and infrastructure upgrades.
• Debt Reduction: Paid down $40 million in 2024, with $385 million of debt remaining.
• Liquidity: Approximately $217 million at year-end 2024.
• Adjusted EBITDA: $233.3 million despite a 7% reduction in realized prices.
• Adjusted Free Cash Flow: $43.6 million, maintaining cash flow positivity for over five years.
• Proved Reserves Growth: Increased by 4.4 million barrels of oil equivalent to 134.2 million barrels.
• PV-10 Value: Approximately $1.5 billion at year-end 2024.
• Fourth Quarter Revenue: $83.4 million, a 7% decrease from the third quarter.
• Net Income Q4 2024: $5.7 million or $0.03 per diluted share.
• Adjusted Net Income Q4 2024: $12.3 million or $0.06 per diluted share.
• CapEx Q4 2024: $37.6 million, with $22 million for drilling and completion.
• Leverage Ratio: 1.66 times at year-end 2024.

• Warning! GuruFocus has detected 4 Warning Signs with REI.

Release Date: March 06, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Ring Energy Inc (REI) achieved record oil sales in 2024, with total sales growing 8% over 2023.
• The company reduced its year-over-year all-in cash operating costs on a per Boe basis by 2%.
• Ring Energy Inc (REI) drilled 13 more wells in 2024 than the previous year with slightly less capital, indicating improved capital efficiency.
• The company paid down $40 million in debt over the year, enhancing its financial stability.
• Ring Energy Inc (REI) grew its proved reserves by 3% to 134.2 million barrels of oil equivalent, demonstrating successful reserve management.

Negative Points

• The fourth quarter saw a 2% decrease in production compared to the third quarter, partly due to a third-party gas plant shutdown.
• Realized oil prices declined by 7% in the fourth quarter, impacting revenue.
• The company reported a loss on derivative contracts of $6.3 million in the fourth quarter.
• Fourth-quarter revenue decreased by 7% compared to the third quarter.
• Ring Energy Inc (REI) faces challenges with its low stock price, which hasn't been this low since 2021.

Q & A Highlights

Q: Can you discuss potential synergies and cost reductions from the recent acquisition, and how quickly you plan to integrate the new locations? A: Paul McKinney, CEO, mentioned that the operations are similar and adjacent to current operations, offering opportunities in water handling and infrastructure. Shawn Young, VP of Operations, noted potential synergies in oil infrastructure and personnel. They plan to integrate and start drilling in the second half of the year, with Alex Dyes, EVP of Engineering, highlighting improved drilling techniques and cost structures.

Q: How does market volatility affect your M&A strategy, and are there more opportunities like Lime Rock? A: Paul McKinney, CEO, explained that while volatility can align buyer and seller expectations, lower prices necessitate a focus on strengthening the balance sheet before pursuing further deals. Alexander Dyes, EVP, added that they aim to optimize and strengthen the balance sheet post-acquisition, similar to past strategies.

Q: Can you elaborate on inventory quality and the impact of acquisitions like Shafter Lake? A: Paul McKinney, CEO, emphasized the competitive economics of their San Andres horizontal locations. Shawn Young, VP of Operations, noted improved well performance and cost reductions, with a focus on maintaining flexibility and optionality in lower oil price environments.

Q: What are Ring Energy's plans for organic growth and identifying new opportunities? A: Paul McKinney, CEO, stated that they are evaluating potential zones under existing acreage and exploring horizontal opportunities in traditionally vertical areas. They aim to use technology to improve capital efficiency and focus on organic growth to complement acquisitions.

Q: Will the Lime Rock assets impact the borrowing base in the upcoming redetermination? A: Paul McKinney, CEO, indicated that while they have sufficient liquidity to close the transaction, the added assets could justify a higher borrowing base. Travis Thomas, CFO, noted the assets' low decline rate and PDP-heavy nature, which are favorable for banks.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.