Ring Energy Posts Second Quarter Profit
Ring Energy posted a net income of $41.9 million for the second quarter of the year, up from the $7.1 million reported in the previous quarter. It has to be reminded that in the second quarter of 2021 Ring reported a net loss of $15.9 million.
Profits were boosted by sales volumes which, for the second quarter of 2022 were 9,341 Boe/d (86 percent oil), or 850,017 Boe, compared to 8,870 Boe/d (85 percent oil), or 798,262 Boe, for the first quarter of 2022, and 8,709 Boe/d (89 percent oil), or 792,551 Boe, in the second quarter of 2021 – a 5 percent and 7 percent increase, respectively, on a Boe/d basis. Second quarter 2022 sales volumes were comprised of 729,484 barrels (Bbls) of oil and 723,196 thousand cubic feet (Mcf) of natural gas.
For the second quarter of 2022, the company realized an average sales price of $109.24 per barrel of crude oil (before the impact of hedging) and $7.29 per Mcf for natural gas. The combined average realized sales price for the period was $99.95 per Boe, up 17 percent from $85.41 per Boe for the first quarter of 2022, and 66 percent higher than $60.26 per Boe in the second quarter of 2021.
During the second quarter of 2022, capital expenditures on an accrual basis were $41.8 million as the company drilled nine wells, completed seven wells, and began the completion process on four wells – all in the NWS.
For full-year 2022, excluding the impact of the pending Stronghold acquisition, Ring reiterates its previous standalone outlook of total capital spending in the range of $120 million to $140 million, which includes the estimated cost to drill 25 to 33 horizontal wells and complete 25 to 30 horizontal wells. Ring’s full-year capital spending outlook includes targeted well reactivations, workovers, infrastructure upgrades, and continuing its CTR program.
The company remains focused on generating free cash flow in 2022, after all expenses, costs and capital expenditures. All 2022 planned capital expenditures will be fully funded by cash on hand and cash from operations, and excess free cash flow is currently targeted for further debt reduction. The combination of anticipated growth in Adjusted EBITDA resulting from higher prices and growth in sales volumes, along with planned further debt reduction, is expected to significantly reduce Ring’s leverage ratio by year-end 2022.
Supported by the success of its targeted development program and continued focus on operational excellence, the company has increased its full-year 2022 sales volumes forecast to 9,300 to 9,700 Boe/d (86 percent oil), compared with its prior full-year 2022 guidance of 9,000 to 9,600 Boe/d. Ring currently expects third quarter 2022 sales volumes to range between 9,500 and 9,900 Boe/d (86 percent oil).
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