Ring Energy (REI) Valuation Update - Nov 5
Posted: Sun Nov 05, 2023 12:19 pm
REI closed at $1.71 on November 3.
I have updated my forecast/valuation model for their Q3 results and updated guidance. My current valuation is reduced by $0.05 to $4.30/share, just because their Q3 production came in below my forecast.
From Ring's press release:
Grew average sales volumes to 17,509 barrels of oil equivalent per day (“Boe/d”) (69% oil) from 17,271 Boe/d (69% oil) for the second quarter of 2023;
> Positively impacting sequential quarterly sales volumes was the Founders Acquisition and the continued success of the Company’s 2023 development program;
> Partially offsetting the overall increase in sales volumes from the second quarter of 2023 were several unanticipated and temporary downtime events at certain third-party natural gas processing facilities affecting natural gas and natural gas liquids (“NGLs”) sales, and downtime due to a tank battery fire that led to a three week outage of oil, natural gas, and associated NGLs sales at that battery;
> The Company exited the third quarter of 2023 at a production rate in excess of 19,000 Boe/d;
The mid-point of Ring's Q4 production guidance is 19,200 Boepd. For 2024 I am using 19,500 Boepd in my forecast.
Ring continues to generate solid free cash flow. As long as they continue to do that, the Company will be fine.
Download my forecast model and look at row 45: "Operating Cash Flow". It is the key stat for all of our Small-Caps.
I have updated my forecast/valuation model for their Q3 results and updated guidance. My current valuation is reduced by $0.05 to $4.30/share, just because their Q3 production came in below my forecast.
From Ring's press release:
Grew average sales volumes to 17,509 barrels of oil equivalent per day (“Boe/d”) (69% oil) from 17,271 Boe/d (69% oil) for the second quarter of 2023;
> Positively impacting sequential quarterly sales volumes was the Founders Acquisition and the continued success of the Company’s 2023 development program;
> Partially offsetting the overall increase in sales volumes from the second quarter of 2023 were several unanticipated and temporary downtime events at certain third-party natural gas processing facilities affecting natural gas and natural gas liquids (“NGLs”) sales, and downtime due to a tank battery fire that led to a three week outage of oil, natural gas, and associated NGLs sales at that battery;
> The Company exited the third quarter of 2023 at a production rate in excess of 19,000 Boe/d;
The mid-point of Ring's Q4 production guidance is 19,200 Boepd. For 2024 I am using 19,500 Boepd in my forecast.
Ring continues to generate solid free cash flow. As long as they continue to do that, the Company will be fine.
Download my forecast model and look at row 45: "Operating Cash Flow". It is the key stat for all of our Small-Caps.