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1. Company Snapshot

1.a. Company Description

Ring Energy, Inc., an exploration and production company, engages in the acquisition, exploration, development, and production of oil and natural gas in Texas and New Mexico.As of December 31, 2021, the company's proved reserves consisted of approximately 77.8 million barrel of oil equivalent.It also had interests in 18,882 net developed acres and 1,406 net undeveloped acres in Andrews and Gaines counties, Texas; 18,437 net developed acres in Culberson and Reeves counties, Texas; and 13,662 net developed acres and 11,993 net undeveloped acres in Yoakum, Runnels, and Coke Counties, Texas and Lea County, New Mexico.


Ring Energy, Inc.primarily sells its oil and natural gas production to end users, marketers, and other purchasers.The company was formerly known as Transglobal Mining Corp.


and changed its name to Ring Energy, Inc.in March 2008.Ring Energy, Inc.


was incorporated in 2004 and is headquartered in The Woodlands, Texas.

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1.b. Last Insights on REI

The recent performance of Ring Energy, Inc. was negatively impacted by several factors. The company's Q4 2024 earnings and revenues missed estimates, with a quarterly earnings of $0.06 per share, missing the Zacks Consensus Estimate of $0.08 per share. This was partly due to escalating costs and a decline in oil prices. Additionally, the company's acquisition strategy, which aimed to boost free cash flow, has increased its leverage to near 2.0x at the end of 2025, a step back from its previous debt reduction efforts.

1.c. Company Highlights

2. Ring Energy's Strong 2025 Performance Sets Stage for Continued Growth in 2026

Ring Energy reported a net loss of $12.8 million for the fourth quarter, but adjusted net income was $3.6 million, excluding non-cash ceiling test impairment charges. The company's adjusted free cash flow was $5.7 million, and it paid down $8 million in debt. Revenue was impacted by lower realized commodity prices, which declined 14% to $35.45 per BOE. However, the company's sales volumes were 20,508 BOE per day, and it generated $166 million in liquidity, net of letters of credit. Earnings per share (EPS) came in at $0.02, beating estimates of $0.01.

Publication Date: Mar -07

📋 Highlights
  • Adjusted Free Cash Flow Growth:: 15% increase despite 18% lower realized commodity prices, setting a company record.
  • Debt Reduction:: $8M paid down in Q4 and $40M total reduction since Lime Rock acquisition; leverage ratio at 2.2x.
  • Reserve Growth:: Total proved reserves up 14% YoY and proved undeveloped inventory increased by 17%.
  • Cost Efficiency:: 35% lower capital spending YoY and 4% reduction in per BOE all-in cash costs.
  • Non-Operated Asset Sale:: Sold 200 BOE/day of production for $4.5M, valued at 4.5x next 12 months cash flow.

Operational Highlights

Ring Energy had a strong year, with a 15% increase in adjusted free cash flow, setting a new company record despite 18% lower realized commodity prices. The company increased sales volumes by 3% year-over-year, total proved reserves by 14%, and proved undeveloped inventory by 17%. It also reduced capital spending by 35% year-over-year and lowered its year-over-year per BOE all-in cash cost by 4%. As Sanu Joel, the company's new Executive Vice President and Chief Financial Officer, noted, "Ring Energy, Inc. has generated resilient free cash flow for 25 consecutive quarters through multiple commodity cycles."

2026 Outlook

The company expects its average annual sales to range between 19,500 to 20,800 barrels of oil equivalent per day in 2026. Its 2026 budget and plans assume WTI oil prices of approximately $60 per barrel and Henry Hub natural gas prices of approximately $3.50 per Mcf. Analysts estimate next year's revenue growth at 12.0%. With a disciplined approach to capital allocation and a focus on reducing costs, Ring Energy is well-positioned for continued growth.

Valuation

Ring Energy's current valuation metrics indicate a relatively attractive price. The company's P/S Ratio is 1.04, and its EV/EBITDA is 4.3. However, its P/E Ratio is -9.16, and its Free Cash Flow Yield is -40.01%, indicating that the market is pricing in some level of risk. With a Net Debt / EBITDA ratio of 2.45, the company's leverage is manageable. Overall, Ring Energy's strong operational performance and attractive valuation metrics make it an interesting investment opportunity.

3. NewsRoom

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Ring Energy Q4 Earnings Call Highlights

Mar -08

Source: defenseworld.net

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Ring Energy: Evidence Piles Up That The Acquisition Strategy Works

Mar -06

Source: seekingalpha.com

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Ring Energy: A Look At Its Projected 2026 Results (Rating Downgrade)

Mar -06

Source: seekingalpha.com

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Ring Energy, Inc. (REI) Q4 2025 Earnings Call Transcript

Mar -05

Source: seekingalpha.com

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Ring Energy Releases Fourth Quarter and Full Year 2025 Results, Year-End 2025 Proved Reserves, and Provides 2026 Guidance

Mar -04

Source: globenewswire.com

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Ring Energy Announces Timing of Fourth Quarter and Full Year 2025 Earnings Release and Conference Call

Feb -24

Source: globenewswire.com

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RioCan Real Estate Investment Trust (REI.UN:CA) Q4 2025 Earnings Call Transcript

Feb -18

Source: seekingalpha.com

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Ring Energy Announces Sonu Johl Named New Chief Financial Officer

Feb -03

Source: globenewswire.com

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (7.51%)

6. Segments

Oil

Expected Growth: 7.5%

Ring Energy's 7.5% growth is driven by increased production from its North Permian Basin assets, improved operational efficiencies, and a favorable crude oil price environment. Additionally, the company's strategic acquisitions and focus on low-cost operations have contributed to its growth momentum.

Natural Gas Liquids

Expected Growth: 7.8%

Ring Energy's 7.8% growth in Natural Gas Liquids is driven by increased production from its North Texas assets, improved operational efficiencies, and a favorable pricing environment. Additionally, the company's strategic acquisitions and divestitures have optimized its asset portfolio, leading to higher margins and increased cash flow.

Natural Gas

Expected Growth: 8.2%

Ring Energy's 8.2% natural gas growth is driven by increased production from its North Texas and Kansas properties, coupled with higher realized prices due to improved market conditions. Additionally, the company's focus on cost reduction and operational efficiencies has enabled it to maintain a low cost structure, further supporting growth.

7. Detailed Products

Crude Oil

Ring Energy, Inc. is an independent oil and gas company that explores, develops, and produces crude oil from its properties in Texas and New Mexico.

Natural Gas

The company also produces natural gas from its properties, which is used as a clean-burning fuel for power generation, industrial processes, and heating.

Natural Gas Liquids (NGLs)

Ring Energy, Inc. also produces NGLs, which are used as a feedstock for the production of plastics, fertilizers, and other petrochemicals.

8. Ring Energy, Inc.'s Porter Forces

Forces Ranking

Threat Of Substitutes

Ring Energy, Inc. operates in the oil and gas industry, which has a moderate threat of substitutes. While there are alternative energy sources, the demand for oil and gas is still high, and the company's products are widely used.

Bargaining Power Of Customers

Ring Energy, Inc. has a diverse customer base, which reduces the bargaining power of individual customers. Additionally, the company's products are essential to its customers' operations, giving it an upper hand in negotiations.

Bargaining Power Of Suppliers

Ring Energy, Inc. relies on a few key suppliers for its operations, which gives them some bargaining power. However, the company's size and scale of operations also give it some negotiating power.

Threat Of New Entrants

The oil and gas industry has high barriers to entry, including significant capital requirements and regulatory hurdles. This makes it difficult for new entrants to join the market, reducing the threat of new competition.

Intensity Of Rivalry

The oil and gas industry is highly competitive, with many established players competing for market share. Ring Energy, Inc. must continually innovate and improve its operations to remain competitive.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 35.19%
Debt Cost 10.23%
Equity Weight 64.81%
Equity Cost 12.84%
WACC 11.92%
Leverage 54.29%

11. Quality Control: Ring Energy, Inc. passed 1 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

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Mexco Energy

A-Score: 4.5/10

Value: 7.2

Growth: 7.2

Quality: 7.5

Yield: 1.0

Momentum: 1.5

Volatility: 2.3

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Calumet Specialty Products Partners

A-Score: 4.2/10

Value: 9.8

Growth: 2.4

Quality: 5.5

Yield: 0.0

Momentum: 4.0

Volatility: 3.7

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Barnwell Industries

A-Score: 4.1/10

Value: 8.9

Growth: 4.2

Quality: 3.0

Yield: 0.0

Momentum: 6.0

Volatility: 2.7

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Ring Energy

A-Score: 3.4/10

Value: 9.3

Growth: 3.7

Quality: 3.6

Yield: 0.0

Momentum: 1.0

Volatility: 3.0

1-Year Total Return ->

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Vital Energy

A-Score: 3.2/10

Value: 9.8

Growth: 2.0

Quality: 4.2

Yield: 0.0

Momentum: 1.0

Volatility: 2.3

1-Year Total Return ->

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Amplify Energy

A-Score: 3.2/10

Value: 8.1

Growth: 3.0

Quality: 4.5

Yield: 0.0

Momentum: 1.5

Volatility: 2.0

1-Year Total Return ->

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Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

1.31$

Current Price

1.31$

Potential

-0.00%

Expected Cash-Flows