Ring Energy (REI)

[dan_s]

I have updated my forecast model for Ring Energy (REI) and posted it to the EPG website. I got a new report on the company today from John White at Roth Capital. Ring is one of John's clients and he has a strong relationship with management. John was kind enough to share his detailed forecast model with me.

My valuation of REI is now $17.60, compared to First Call's price target of $17.80. John's valuation of $20.00/share is based on very conservative oil and gas prices.

Ring is focused on their Central Basin Platform horizontal drilling program. Early San Andres HZ well results are very encouraging. If the wells continue to produce at or above the type curves, there is significant upside to my valuation. Ring also has some valuable leasehold in the Delaware Basin.

Ring is a PRIME TAKEOVER TARGET. Management is crystal clear that their goal is to build up the company's production and proven reserves and then sell the company when oil & gas prices are higher.

[ChuckGeb]

The share count increased by 5mm shares or 10% due to issuance at $12.50 per share on 7/21. Impact on your valuation?

[dan_s]

It will impact it slightly. Roth Capital just issued a new report on Ring. If you want to see it, send me an e-mail.

[dan_s]

I have updated the Ring Energy forecast and posted it to the EPG website. I am using their "Fully Diluted" share count after the 7/21/2017 equity offering for all of 2017 and beyond.

My valuation dips to $16.55/share, but you could make the argument that the company now has a stronger balance sheet and therefore deserves a higher multiple. Ring has no debt and more than enough cash and cash flow from operations to totally fund their capital program through 2018. Very few companies can make that statement.

[wilmawatts]

These guys are the old Arena Resources management, they are sharp