Ring Energy (REI) Valuation Update - Jan 29

[dan_s]

Ring's Q4 2023 production came in at 19,400 Boepd (70% oil), 200 Boepd above my forecast. The Company continues to be free cash flow positive; using it to pay down debt.

Only negative in this morning's operations update was that Q1 2024 production will be down about 1,000 Boepd due to cold weather that caused lots of wells to be shut-in for ten days. All wells have been placed back on production and production has rebounded. My forecast assumes Q2 2024 production of 19,500 Boepd with a mix of 69% crude oil, 15% NGLs and 16% natural gas.

The Company did not give full year 2024 production guidance, but their two-rig drilling program (more than fully funded by operating cash flow) should be able to ramp up production to 20,200 Boepd by year-end.

My valuation increases by $0.45 to $4.50, which is just 4X annualized operating cash flow for 2023 to 2025.

REI and REPX don't get much "love" from the Wall Street Gang because they are in the Central Basin Platform area of the Permian Basin. Wells are much cheaper to drill & complete in the CBP, but they don't have the high IP rates as the deep wells in the Delaware Basin.

[ChuckGeb]

Any chance you can get Riley to host a luncheon or webinar to update us?

[dan_s]

They have hosted a luncheon, so there is a chance.

Today we set up a Houston luncheon for March 28 to be hosted by U.S. Energy Development.