Ring Energy, Inc. Releases Third Quarter / Nine Month 2018 Operations Update
Ring Energy, Inc. (NYSE American: REI) (“Ring”) (“Company”) today
released its operations updates for the third quarter and first nine
months of 2018. In the three months ended September 30, 2018, the
Company, on its Central Basin Platform (“CBP”) asset, drilled 16 new
horizontal San Andres wells and were in the process of drilling two
more. The Company also drilled two new horizontal wells on its North
Gaines Property. All wells drilled in the third quarter were one mile
long. In the third quarter, the Company finished testing and filed
Initial Potentials (“IPs”) on 15 new horizontal San Andres wells – four
wells which were drilled in the first quarter of 2018, five which were
drilled in the second quarter of 2018 and six which were drilled in the
third quarter of 2018. The average IP on the 15 wells tested in the
third quarter 2018 was approximately 435 Barrel of Oil Equivalents
(“BOE”) per day, or 103 BOE per 1,000 feet. This compares to 18 new
horizontal wells which the Company finished testing in the second
quarter of 2018, and had average IPs of 440 BOE per day, or 103 BOE per
1,000 feet. In addition, the Company had 17 new horizontal San Andres
wells which were in varying stages of completion and testing on
September 30, 2018.
For the nine months ended September 30, 2018, the Company has drilled 40
new horizontal San Andres wells on its CBP asset. In addition, the
Company has drilled three new horizontal well on its North Gaines
Property, one new horizontal Brushy Canyon well on its Delaware Basin
Property, three saltwater disposal wells and continued up-grading the
infrastructure in all areas. In the first nine months of 2018, the
Company tested and filed IPs on 45 new horizontal wells. The average IP
on the 45 wells was 437 BOE per day, or 103 BOE per 1,000 feet.
In the second and third quarters of 2018, the Company performed
workovers on 11 existing San Andres horizontal wells because of an iron
sulfide buildup in the wellbores. The average cost of each workover was
approximately $350,000. Based on a received price per BOE of $50, the
payback period ranges from four to six months. Mr. Danny Wilson, Ring’s
Executive Vice President and Chief Operating Officer, stated, “We
noticed an abnormal decline in some of the older wells, discovered the
buildup of iron sulfide, initiated a program of cleaning out and
acidizing, and have seen those wells return, and in some cases exceed,
our current production curve. This is not a recurring issue and not one
that effects all of the wells.”
North Gaines Property –
The Company drilled and completed two new horizontal wells, the Ellen B
Peters 4H (“Ellen”) and Loki 2H (“Loki”), on its North Gaines Property
in the third quarter. The Company completed testing on the Ellen early
in the third quarter and filed an IP of 431 BOE per day. After initial
production, the Ellen has stabilized and has been producing
approximately 150 barrels of oil per day (“BOPD”) and 60,000 cubic feet
of natural gas per day for the past month. The Loki is still being
tested but preliminary production results are showing approximately 100
BOPD and 50,000 cubic feet of natural gas per day. The well still has a
high fluid level and management is hopeful that as that level drops the
oil production will improve. Mr. Wilson commented, “We continue to be
encouraged with the results we are seeing in North Gaines. We continue
to learn as we gather more information from each well we drill. We will
be drilling two more new horizontal wells in the fourth quarter.”
Delaware Basin Property –
Management stated in the Company’s second quarter 2018 operations update
that it had drilled and completed its first horizontal well, the Phoenix
State #1H (“Phoenix”), on its Delaware Basin Property in the Brushy
Canyon formation. At that time preliminary production results were
approximately 130 barrels of oil per day and over 2,800,000 cubic feet
of natural gas per day. The well is still undergoing testing as the
fluid levels and pressure levels are still high and management believes
it is possible to see higher oil rates as the fluid level drops.
Currently, the Phoenix is producing approximately 80 BOPD and 1,800,000
cubic feet of natural gas per day. Mr. Danny Wilson, commented, “The
Phoenix was drilled on the high end of structure and as such is gassier
than we anticipated. We will be drilling two more horizontal wells in
the Brushy Canyon formation in the fourth quarter. Both wells are
planned to be drilled lower in the structure, where the structure has
shown to be thicker, and existing producing vertical wells have shown
higher oil cuts and less gas. In preparation for further development we
have completed our gas transmission system and have begun selling our
gas production.”
As a result, net production for the third quarter of 2018 was
approximately 600,000 BOEs, as compared to net production of 376,000
BOEs for the third quarter of 2017, an approximate 59.5% increase, and
net production of 532,000 for the second quarter of 2018, an approximate
12.8% increase. September 2018 average net daily production was
approximately 7,294 BOEs, as compared to net daily production of 4,345
BOEs in September 2017, an approximate 67.8% increase, and net daily
production of 6,605 in June 2018, an approximate 10.4% increase. The
average estimated price received per BOE in the third quarter 2018 was
$52.00. For the nine months ended September 30, 2018, net production was
approximately 1,639,000 BOEs, as compared to 980,000 for the nine months
ended September 30, 2017, an approximate 67.2% increase.
Mr. Kelly Hoffman, Ring’s Chief Executive Officer, stated, “The Company
is back on track as shown by our third quarter results. We continue to
update and improve our infrastructure in preparation for our on-going
drilling and development in the CBP, North Gaines and Delaware Basin. We
continue to vary our selection of drill sites to include both core and
non-core sites for the sole purpose of proving out and delineating for
future development and possible acquisition opportunities. We have no
plans currently, or in the near future to return to the capital markets
as we believe we have ample funds by way of our current cash flow and
senior credit facility to accomplish our goals for 2018. Our gas system
in the Delaware Basin is now completed and we are currently selling gas
from our Phoenix well. Had we been able to sell rather than flare that
gas in the third quarter it could have added an additional 150-200 BOEPD
to our production.”
About Ring Energy, Inc.
Ring Energy, Inc. is an oil and gas exploration, development and
production company with current operations in Texas.
www.ringenergy.com
Safe Harbor Statement
This release contains forward-looking statements within the meaning of
the “safe-harbor” provisions of the Private Securities Litigation Reform
Act of 1995 that involve a wide variety of risks and uncertainties,
including, without limitations, statements with respect to the Company’s
strategy and prospects. Such statements are subject to certain risks and
uncertainties which are disclosed in the Company’s reports filed with
the SEC, including its Form 10-K for the fiscal year ended December 31,
2017, its Form 10-Q for the quarter ended June 30, 2018 and its other
filings with the SEC. Readers and investors are cautioned that the
Company’s actual results may differ materially from those described in
the forward-looking statements due to a number of factors, including,
but not limited to, the Company’s ability to acquire productive oil
and/or gas properties or to successfully drill and complete oil and/or
gas wells on such properties, general economic conditions both
domestically and abroad, and the conduct of business by the Company, and
other factors that may be more fully described in additional documents
set forth by the Company.
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