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- **Resilient Operations**: Exceeded BOE guidance with $10.73/BOE lifting costs, down 3% QoQ. 
- **Debt Reduction**: $20M debt paydown (vs. $2M guide), targeting 2.1x leverage ratio. 
- **Hedging Strength**: 53% oil hedged at $62.08, mitigating price risk. 
- **Growth Strategy**: Organic inventory build for future expansion, avoiding acquisitions due to leverage. 
- **Financial Focus**: Debt reduction prioritized over dividends, with potential asset sales for additional paydown.

**【Management Opening Remarks】**
- Al Petrie provided procedural instructions and highlighted the availability of the updated corporate presentation. He emphasized forward-looking statements and risks, including commodity price volatility and leverage ratio management.

**【CEO Summary Section】**
- **Operational Resilience**: Achieved 13,332 barrels of oil per day (BOE) and 20,789 BOE per day, above midpoint guidance, driven by new wells and cost-cutting (lifting costs $10.73/BOE). 
- **Cash Flow & Debt Reduction**: Generated $13.9M adjusted free cash flow, reducing debt by $20M (vs. $2M guidance). 
- **Strategic Focus**: Prioritizes balance sheet strength (leverage ratio 2.1x) over acquisitions, with potential organic growth through undeveloped inventory.
- **Market Position**: Undervalued stock and focus on debt reduction over dividends or buybacks.

**【CFO Financial Commentary】**
- **Revenue & Pricing**: $78.6M revenue, with oil prices $64.32/BOE (3% higher QoQ), offset by 16% NGL price decline. 
- **Cost Efficiency**: LOE $10.73/BOE (below $11-$12 guidance), G&A $6.5M (up due to executive separation costs). 
- **Financial Metrics**: Net loss $51.6M (due to $72.9M impairment), adjusted EBITDA $47.7M. 
- **Hedging**: 53% oil and 33% gas hedged for Q4, with $62.08 oil floor price. 
- **Guidance Update**: Full year 2025 BOE 19,800-20,400, cost $10.95-$11.25/BOE.

**【Q&A Key Highlights】**
- **Balance Sheet Strategy**: Exploring terming revolver, but RBL remains lowest cost. 
- **Service Costs**: Pressure on service costs expected to continue, with savings from operational efficiency. 
- **Debt Reduction**: Q4 target $10M (excluding $10M Lime Rock payment), potential $20M if non-op asset sold. 
- **Organic Growth**: Focusing on undeveloped inventory in Central Basin Platform, with deeper benches for future wells. 
- **Stock Performance**: Undervalued relative to peers, with potential re-rating as leverage improves.

Ring Energy, Inc. (REI) Q3 2025 Earnings Call Transcript

- **Operational Excellence**: Q2 2025 production records (14,511 BOED) and 13% production per share growth driven by Lime Rock integration, with LOE down 12% to $10.45/BOE.
- **Financial Resilience**: $24.8 million free cash flow and $12 million debt paydown despite 11% oil price decline, supported by 34-month credit facility extension.
- **Strategic Debt Focus**: Prioritizing debt reduction (leverage 2.05x) over growth, with potential $20-45 million H2 free cash flow targeting $10 million deferred debt repayment.
- **Sustainability**: Long reserve life (18.7 years) and shallow decline rates (second-lowest in peer group) enhance operational sustainability and capital efficiency.

**【CEO Summary Section】**
- **Record Production and Cost Efficiency**: Achieved 14,511 barrels of oil per day (BOED) and 21,295 BOE per day, with lease operating expenses (LOE) reduced to $10.45/BOE, below guidance. Lime Rock asset integration drove $400,000/month savings and 13% production per share growth.
- **Free Cash Flow Growth**: Generated $24.8 million in adjusted free cash flow, a 250% increase year-over-year, with $12 million debt paydown.
- **Strategic Focus**: Emphasized debt reduction despite oil price volatility, with plans to test alternative horizons like horizontal drilling in the South.

**【CFO Financial Commentary】**
- **Financial Highlights**: GAAP net income of $20.6 million ($0.10/diluted share), adjusted EBITDA of $51.5 million, and $16.8 million capital expenditures (48% lower than Q1). Hedge positions for 2025 include 1.3 million barrels of oil at $64.87/avg and 1.5 Bcf gas at $3.37/avg.
- **Balance Sheet Strength**: $585 million borrowing base with 34-month extension, reducing interest costs by $250,000 annually. Leverage ratio of 2.05x post $12 million debt reduction.
- **Guidance Update**: Full-year 2025 production guidance maintained at 12,700-13,700 BOED, with Q3 LOE guidance of $11-12/BOE.

**【Q&A Key Highlights】**
- **Stock Performance**: CEO attributes underperformance to selling pressure from large shareholders and high leverage, but highlights long reserve life (18.7 years vs. peer median 11.1) and low decline rates.
- **Debt Reduction Targets**: CFO notes potential $20-45 million free cash flow in H2, with focus on paying down $10 million deferred debt by December 2025.
- **Midstream Impact**: CFO expects gas price improvements from reduced drilling activity, while CEO explores alternative horizons like Barnett Shale for future growth.
- **Cost Synergies**: Operating team reduced field staff by 50% in Shafter Lake, saving $3/BOE, with plans to expand chemical vendor efficiencies to Northern assets.


Ring Energy, Inc. (REI) Q2 2025 Earnings Call Transcript

- **Q1 Outperformance**: 12,074 bbls oil/d sold (97% oil mix), 7% lower-than-budget well costs. Lime Rock acquisition added 40+ drilling locations, April production 9% above estimates.
- **Capital Restructuring**: 2025 CapEx cut 47% YoY to $85-113M. 2% annual production growth target despite lower spending. Free cash flow focused on debt reduction.
- **Debt Discipline**: Target leverage <1.0. 2025 free cash flow allocated to debt repayment. Borrowing base $600M, $140M available.
- **CBP Growth**: Testing horizontal drilling in CBP. Lime Rock acquisition added 17,700 net acres with 85-90% net interest. South acreage exposed to emerging plays but returns oil-price dependent.

**【CEO Opening Remarks】**
- Q1 2025: Exceeded guidance with 18,392 Boe/d sold, 12,074 bbls oil/d (above high end of guidance). New wells outperformed pre-drill estimates, with 7% lower-than-budget well costs.
- Lime Rock CBP acquisition: 100+ wells acquired, 75% oil cut, 17,700 net acres (90% contiguous). April production 2,500 Boe/d (9% above valuation estimates), adding 40+ drilling locations.
- 2025 Guidance Update: Capital spending reduced by 47% YoY (to $85-113M), targeting 2% annual production growth. Free cash flow prioritized for debt reduction.

**【CFO Financial Review】**
- Q1 Revenue: $79.1M (12,074 bbls oil/d, 97% oil mix). Realized oil price $47.78/Boe (4% YoQ increase). LOE $19.7M ($11.89/Boe, below guidance midpoint).
- Net Income: $9.1M ($0.05/diluted share). Adjusted EBITDA $46.4M. Free cash flow $5.8M (vs. $4.7M Q4 2024).
- Capital Allocation: $32.5M spent (14% YoQ decline). Debt increased to $460M (due to Lime Rock acquisition). Leverage ratio 1.9x (includes $10M deferred payment).
- Hedging: 1.7M barrels oil hedged (47% of guidance midpoint) at $64.44/bbl. 2 Bcf gas hedged at $3.43/Mcf.

**【Q&A Key Takeaways】**
- **Debt Reduction Focus**: Target leverage ratio <1.0. 2025 free cash flow allocated to debt repayment, not growth. Current borrowing base $600M, $140M available.
- **Capital Flexibility**: Q2 2025 CapEx $14-22M (down 50% YoQ). If costs decline further, savings used for debt reduction, not additional wells.
- **Industry Trends**: Central Basin Platform (CBP) seeing increased interest from large private operators. Ring prioritizes low-cost, high-margin vertical wells with unconventional completions. South acreage exposed to emerging plays (Barnett, Woodford), but returns dependent on oil price.
- **Organic Growth**: Expanding geoscience team to map CBP. Testing horizontal drilling in CBP (fewer wells, longer laterals). Lime Rock acquisition added 17,700 net acres with held-by-production rights (85-90% net interest in oil/gas).

Ring Energy, Inc. (REI) Q1 2025 Earnings Call Transcript

- **Record Production Growth**: 8% total sales growth to 19,648 BOE/d, driven by 6% oil volume increase.
- **Cost Optimization**: 2% per BOE cost reduction and 13 additional wells drilled with same capital.
- **Strong Cash Flow**: $43.6M free cash flow despite 7% price decline, maintaining 5+ years of positivity.
- **Reserve Expansion**: 3% proved reserve growth to 134.2M BOE, with organic additions outpacing depletion.
- **Strategic Acquisitions**: Lime Rock deal ($100M) expands CBP position in core Texas area, aligning with Shafter Lake operations.

**【CEO Summary Section】**
- **Revenue Growth**: Total sales reached 19,648 BOE/d (up 8% YoY), with oil sales at 13,283 bbl/d (6% YoY increase). 
- **Cost Efficiency**: All-in cash operating costs decreased 2% per BOE. Drilled 13 more wells in 2024 than prior year with similar capital spend, improving capital efficiency.
- **Financial Performance**: Adjusted EBITDA of $233.3M despite 7% price decline. Generated $43.6M adjusted free cash flow, maintaining 5+ years of cash flow positivity.
- **Reserve Growth**: Proved reserves increased 3% to 134.2M BOE. Organically added 16M BOE, offsetting 7.2M BOE of production and 3.2M BOE from price reductions.
- **Acquisition Highlights**: 
  - **Stronghold & Founders**: Exceeded expectations, adding high-margin drilling locations. 
  - **Lime Rock Transaction**: $100M purchase (80% cash, 20% stock) for CBP acreage in Andrews County, TX. Closes Q1 2025 with 10M deferred payment. Acreage directly offsets core Shafter Lake operations and offers new play potential.
- **Debt Management**: Reduced debt by $40M since Founders acquisition, ending 2024 with $385M debt and $217M liquidity.

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