Ring Energy (REI) Valuation Update - May 11
Posted: Thu May 11, 2023 3:09 pm
I have updated my forecast/valuation model for Ring Energy and I have posted it to the EPG website.
My valuation is now $4.45 per share, lower by $0.45 due to the increased share count caused by the warrants being exercised. The Company did get $9 million of much needed cash when the warrants were exercised that they used to pay down debt, which is a good thing.
REI closed today at $1.675.
Ring is profitable and they are generating free cash flow. My 2023 forecast is $0.49 EPS and $1.05 Operating CFPS. Profitable upstream companies should trade for more than 1.5 X CFPS. 4X CFPS is reasonable for Ring.
As long as Ring continues to generate free cash flow they will be fine. They appear to have steady production growth locked in and they have plenty of running room in the CBP. Selling the Lea County, NM assets for a decent price would lower debt, which is the Company's primary problem in this market.
My valuation is now $4.45 per share, lower by $0.45 due to the increased share count caused by the warrants being exercised. The Company did get $9 million of much needed cash when the warrants were exercised that they used to pay down debt, which is a good thing.
REI closed today at $1.675.
Ring is profitable and they are generating free cash flow. My 2023 forecast is $0.49 EPS and $1.05 Operating CFPS. Profitable upstream companies should trade for more than 1.5 X CFPS. 4X CFPS is reasonable for Ring.
As long as Ring continues to generate free cash flow they will be fine. They appear to have steady production growth locked in and they have plenty of running room in the CBP. Selling the Lea County, NM assets for a decent price would lower debt, which is the Company's primary problem in this market.