Dan, would appreciate some education on what makes the warrants a "good thing." This could increase the total outstanding shares by 7.7% +. I had never heard of "warrants" before this news release. Thanks!
Ring Energy
Re: Ring Energy
Re: Ring Energy
Warrants are like Call options, but they are exercised by the "Warrant Holder" sending money to the company based on the warrants "strike price" and the company issues the shares directly to the warrant holders.
Warrants are normally given to an equity provider or lender as compensation for them taking the risk of putting money into the company. In this case the warrants with a 5-year term were issued as part of a registered direct equity offering in 2020 (a time of much higher risk for Ring) and were exercisable for shares of the Company’s common stock at an initial exercise price of $0.80 per share. Ring agreed to lower the strike price to $0.62 per share in order to get the warrants' holders to exercise them early.
As a result, Ring got $8,997,543 early, instead of having wait until the expiration date (October, 2025). < See page 55 of Ring's recent 10-K for details on why the warrants were issued in October, 2020.
It is common for warrants to be issued as part of an equity offering. Warrants that are "in the money" are included in a public companies "fully diluted share count", to they are not something that is hidden in anyway.
Getting this money now is very helpful to Ring's efforts to reduce their debt and improve their balance sheet ratios.
Warrants are normally given to an equity provider or lender as compensation for them taking the risk of putting money into the company. In this case the warrants with a 5-year term were issued as part of a registered direct equity offering in 2020 (a time of much higher risk for Ring) and were exercisable for shares of the Company’s common stock at an initial exercise price of $0.80 per share. Ring agreed to lower the strike price to $0.62 per share in order to get the warrants' holders to exercise them early.
As a result, Ring got $8,997,543 early, instead of having wait until the expiration date (October, 2025). < See page 55 of Ring's recent 10-K for details on why the warrants were issued in October, 2020.
It is common for warrants to be issued as part of an equity offering. Warrants that are "in the money" are included in a public companies "fully diluted share count", to they are not something that is hidden in anyway.
Getting this money now is very helpful to Ring's efforts to reduce their debt and improve their balance sheet ratios.
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group
Re: Ring Energy
Rok Resources also have warrants as well. I think the closing date to exercise the warrants are Q1 2025 and the exercise price is $0.25 CAD.
Re: Ring Energy
Go to slide 6 of ROK Resources Spring 2023 presentation slides, which they will be speaking from at Tuesday's luncheon in Houston.
Warrants and Options can be dilutive BUT THEY ALSO CAN BRING A LOT OF EQUITY CAPITAL INTO THE COMPANY.
If the warrants and options listed on slide 6 are all exercised it will bring $34.646Cdn million of cash into the Company, which can be used to accelerate their production growth. That equity infusion will also shore up the balance sheet, making it easier for ROK to get more capital if needed.
My point is that warrants are not a "Bad Thing". They are commonly used in this business to get start-up capital. The company and the shareholders want the warrants to be exercised because it means the company is being successful and growing.
ROK's current production is ~3,750 Boepd (~60% crude oil) and they have a clear path to a 2023 exit rate of 4,500 Boepd. Based on my forecast model, they should generate $45 to $50Cdn million of operating cash flow this year, more than enough to cover this year's drilling program AND END THE YEAR DEBT FREE.
Warrants and Options can be dilutive BUT THEY ALSO CAN BRING A LOT OF EQUITY CAPITAL INTO THE COMPANY.
If the warrants and options listed on slide 6 are all exercised it will bring $34.646Cdn million of cash into the Company, which can be used to accelerate their production growth. That equity infusion will also shore up the balance sheet, making it easier for ROK to get more capital if needed.
My point is that warrants are not a "Bad Thing". They are commonly used in this business to get start-up capital. The company and the shareholders want the warrants to be exercised because it means the company is being successful and growing.
ROK's current production is ~3,750 Boepd (~60% crude oil) and they have a clear path to a 2023 exit rate of 4,500 Boepd. Based on my forecast model, they should generate $45 to $50Cdn million of operating cash flow this year, more than enough to cover this year's drilling program AND END THE YEAR DEBT FREE.
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group
Re: Ring Energy
Thank you Dan.
How do you treat the number of shares in you spreadsheet models?
Do you account somehow for the amount of warrants and options outstanding in you valuations?
Regards, Klaus
How do you treat the number of shares in you spreadsheet models?
Do you account somehow for the amount of warrants and options outstanding in you valuations?
Regards, Klaus
Re: Ring Energy
Ring Energy posted on its website the presentation given at the Dallas event today.
On slide Nr. 11 there is a clear explanation of the shares and warrants as of now.
Ring wants to get approval to issue more common shares (225MM) in order to continue growth through acquisitions.
Ring currently has a lot of running room to grow.
Currently more than 20 yrs of current production in reserves.
Lots of potential.
Dan please, correct me where I should be wrong.
Regards
On slide Nr. 11 there is a clear explanation of the shares and warrants as of now.
Ring wants to get approval to issue more common shares (225MM) in order to continue growth through acquisitions.
Ring currently has a lot of running room to grow.
Currently more than 20 yrs of current production in reserves.
Lots of potential.
Dan please, correct me where I should be wrong.
Regards
Re: Ring Energy
If you include warrants in the fully diluted share count, you need to also include the impact of the money the company gets when the warrants are exercised.
Warrants being exercised is a GOOD THING because the company gets a big slug of cash.
Warrants being exercised is a GOOD THING because the company gets a big slug of cash.
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group