Ring Energy (REI) Valuation Update - May 10

[dan_s]

REI closed at $0.85 on May 9.
I have updated my forecast for their solid Q1 2025 results and fresh guidance.

I have lowered my current valuation by $0.65 to $2.95, which compares to First Call's Price Target of $3.47.

Ring Energy's revenues are heavily weight to oil prices. The Company has decided to "hunker down" and significantly reduce D&C activities and capital expenditures for the remainder of 2025. This will keep them free cash flow positive, which will keep the debt holders happy. This is the right move for a small-cap that must continue to pay down debt.

Ring's production will increase from 18,392 Boepd in Q1 to ~21,500 Boepd in Q2 2025 due to the Lime Rock Acquisition that closed on March 31, 2025.

If WTI oil stays over $60/bbl Ring will be fine and should return to growth mode in 2026.