Ring Energy (REI)

[dan_s]

An updated profile for REI has been posted to the EPG website.

This small-cap has a great management team and some very good assets in the Permian Basin. I recently dropped Ring from our Small-Cap Growth Portfolio because (a) they did not provide any guidance for 2016 and (b) none of their production is hedged. If oil prices rebound, like I expect them to, Ring has a lot of upside for us. They have very little debt and positive cash flow from operations, even at today's low oil & gas prices.

Roth Capital's updated their analysis of the company on March 23rd. Roth rates it a BUY with a valuation of $8.50/share.
Roth held a conference call with Ring management recently and on the call Tim Rochford, Ring's Chairman and David Fowler, Ring's President, gave some insight into what they plan to do this year in the Permian. Ring will be drilling their first horizontal well this year. The company holds leasehold in areas where Concho Resources (CXO) and Devon Energy (DVN) are getting some outstanding horizontal well results.

Ring has a conservative balance sheet (very little debt) and most of their leasehold is HBP. They don't need to do much to hold their production level. When the price of oil moves higher, they can easily ramp up their drilling program.

For long-term investors, accumulating REI now should pay off BIG when oil prices rebound. This company is being built for a sale when the time is right.