Oil and gas company stocks have taken a beating as oil prices have tumbled from a peak of over $100 in 2014 to around $50 a barrel today. This fall in prices crippled many exploration and production companies. Down from its peak of nearly $20 per share in 2014, Ring Energy, Inc. (NYSE MKT: REI) is still in a better position than most. Unlike other drillers, Ring Energy isn’t highly leveraged and has comparatively low production costs.
Ring Energy has stated that it could operate profitably under $60 per barrel, and the majority of the company’s crude production is based in the Permian Basin, which has fewer bottlenecks than the Bakken Formation. In its January 9, 2017, press release, the company reported “net production for the fourth quarter of 2016 was approximately 240,000 BOEs (Barrel of Oil Equivalent), as compared to net production of 218,500 BOEs for the same quarter in 2015, an approximate 10% increase, and net production of 209,000 for the third quarter of 2016, an approximate 15% increase… For the twelve months ended December 31, 2016, net production was approximately 865,500 BOE, as compared to 742,070 for the twelve months ended December 31, 2015, an approximate 16% increase.” The company’s low production costs and the increase in production has correlated into its share price more than doubling over the last year.
Ring Energy’s exploration and production interests focus primarily on Texas and Kansas. The company’s drilling operations target the Central Basin Platform in Andrews and Gaines Counties, Texas, and the Delaware Basin in Reeves and Culberson Counties, Texas. The company has proved reserves of approximately 24 million BOE.
Oil has certainly been on a ride the last few years, but it’s still an essential commodity that will continue to drive the world economy. Ring Energy has weathered the oil price collapse. Any further increase in oil prices, combined with the company’s cost cutting and increased production, should provide both topline and bottom line lift in the coming quarters.
For more information, visit www.RingEnergy.com
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