Ring Energy Inc., an oil and gas exploration and development company, provided 4Q and full-year 2021 updates. There was an 11% increase from the third quarter of 2021 and reduced borrowings by $5 million. The report involves sales volume, further paydown of debt; the commencement of the 2022 drilling program, and recently enhanced hedging position.
Firstly, 4Q 2021 sales volumes grew to 9,154 barrels of oil equivalent per day (85% oil). There was an 11% increase from the 3Q to the 4Q; resulting in full-year 2021 sales volumes of 8,519 barrels of oil equivalent per day (86% oil).
Reducing borrowings
Secondly, due to the success of its 2021 development program and a continued improvement in crude oil and natural gas prices; on December 31, 2021, the company had $290 million in borrowings on its revolving credit facility. This facility has a current borrowing base of $350 million. During 4Q 2021, the company reduced borrowings by $5 million in the 4Q, driven by further free cash flow.
Additionally, Ring Energy paid down $23 million in the entire year. The company finished the year with approximately $2.4 million cash on hand, improving its liquidity to nearly $62 million. Ring remained cash flow for the ninth consecutive quarter, marking over two years in a row of generating free cash flow.
Thirdly, during the second half of 2021, performed 11 conversions from electrical submersible pumps to rod pumps. This resulted in 25 rod pumps for all 2021 and six Central Basin Platforms; as well as reducing term operating costs.
A good start for Ring Energy
Moreover, Ring’s 2022 drilling program began late in January. It successfully drilled its first two Central Basin Platforms and initiated completion operations.
The company also enhanced its hedge position to capitalize on the competitive price environment. Furthermore, it supported the 2022 development program by adding 1,000 barrels of oil per day. Hence, an average swap price of $84.61 per barrel for February through December 2022.
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Paul D.McKinney, Chairman of the Board and CEO, said, “Beginning January 1, 2022, nearly 60% of our low-priced hedges rolled off, allowing for substantially higher revenue in 2022 assuming the current oil price environment continues.” He continued, “we are truly excited about 2022 and beyond. The current strong energy pricing environment, together with continued drilling success, should allow us to increase operational cash flow significantly in 2022. In short, we continue to execute on our targeted strategy to further drive financial stability, improve the balance sheet and increase shareholder value.”
