Acquisition Presentation December 2018

Transcription

1 Acquisition Presentation December OTCQX:RNGE NYSE American: REI

2 Forward-Looking Statements and Cautionary Note Regarding Hydrocarbon Disclosures Forward Looking Statements This Presentation includes "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995, the Securities Act of 1933 and the Securities Exchange Act of All statements, other than statements of historical facts included in this Presentation regarding the Company's financial position, future revenues, net income, potential evaluations, business strategy and plans and objectives for future operations are "forward-looking statements." These forward-looking statements are commonly identified by the use of such terms and phrases as may, will, intends, estimates, expects, anticipates and believes or the negative variations thereof or comparable terminology. These forward-looking statements are subject to numerous assumptions, risks and uncertainties that may cause actual results to be materially different than any future results expressed or implied in those statements. Factors that could cause actual results to differ materially from expected results are described under Risk Factors in our 2017 annual report on Form 10-K filed with the U.S. Securities and Exchange Commission ( SEC ) on March 15, Although the Company believes that the assumptions upon which such forward-looking statements are based are reasonable, it can give no assurance that such assumptions will prove to be correct. All forward-looking statements in this Presentation are expressly qualified by the cautionary statements and by reference to the underlying assumptions that may prove to be incorrect. The Company undertakes no obligation to publicly revise these forward-looking statements to reflect events or circumstances that arise after the date hereof, except as required by applicable law. The financial and operating projections contained in this presentation represent our reasonable estimates as of the date of this presentation. Neither our auditors nor any other third party has examined, reviewed or compiled the projections and, accordingly, none of the foregoing expresses an opinion or other form of assurance with respect thereto. The assumptions upon which the projections are based are described in more detail herein. Some of these assumptions inevitably will not materialize, and unanticipated events may occur that could affect our results. Therefore, our actual results achieved during the periods covered by the projections will vary from the projected results. Prospective investors are cautioned not to place undue reliance on the projections included herein. Cautionary Note regarding Hydrocarbon Disclosures The SEC has generally permitted oil and gas companies, in their filings with the SEC, to disclose only proved reserves that a company has demonstrated by actual production or conclusive formation tests to be economically and legally producible under existing economic and operating conditions. We use the terms estimated ultimate recovery, EUR, probable, possible, and non-proven reserves, reserve potential or upside or other descriptions of volumes of reserves potentially recoverable through additional drilling or recovery techniques that the SEC s guidelines may prohibit us from including in filings with the SEC. Reference to EUR (estimated ultimate recovery) of natural gas and oil includes amounts that are not yet classified as proved reserves under SEC definitions, but that we believe will ultimately be produced. These estimates are by their nature more speculative than estimates of proved reserves and accordingly are subject to substantially greater risk of being actually realized by us. Factors affecting ultimate recovery include the scope of our drilling program, which will be directly affected by capital availability, drilling and production costs, commodity prices, availability of services and equipment, permit expirations, transportation constraints, regulatory approvals and other factors, and actual drilling results, including geological and mechanical factors affecting recovery rates. Accordingly, actual quantities that may be recovered from our interests will differ from our estimates, and could be significantly less than our targeted recovery rate. In addition, our estimates may change significantly as we receive additional data. 2

3 Core-of-the-Core Bolt-On Acquisition Asset Highlights Pro Forma Acreage Map Ring has entered into an agreement to acquire acreage in Andrews County, TX that it has pursued since the Company s inception Consideration of ~2.6 million REI shares 4,763 net acres Adds 46 core-of-the-core gross potential horizontal San Andres locations In separate transactions, Ring also agreed to acquire 550 net acres with an incremental 9 core-of-the-core gross potential horizontal San Andres locations Acquired acreage plugs in perfectly to existing disposal, water and oil & gas pipeline infrastructure Ring Energy Acreage Acquired Acreage Pro Forma Central Basin Platform Net Acres 5,313 75,926 Current CBP Net Acres Acquired Net Acres 70,613 3

4 Strategic Rationale Contiguous Bolt-Ons to Existing Core Position Acquisitions are core-of-the-core and mostly contiguous with Ring s existing Central Basin Platform footprint Blocked up acreage provides opportunity for extended lateral development Complementary additions to well known and de-risked Ring acreage position Significant Scale on the Platform Expands Ring s leadership position in the Central Basin Platform Expands premium horizontal inventory in the Central Basin Platform by 55 Economies of scale enhances service and logistics advantages Development Flexibility Combination of assets results in improved acreage efficiency Easily integrate acquired acreage into development plan Acquired acreage easily plugs into existing SWD system, O&G pipeline and other infrastructure Provides access to additional takeaway pipeline, which improves flow assurance Financially Attractive Acquisition Highly accretive on an NAV basis, core Central Basin Platform acreage and premium inventory Identified significant operational synergies Maintains conservative balance sheet Seller desired equity versus cash as it believes REI is a best-in-class operator and the assets being transferred are synergistic with Ring s existing properties 4

5 Core San Andres Position with Strong Offset Well Results Well Name Operator IP-24 (Boe/d) Lateral Length 1 University JV 14 8H Pacesetter 1,363 7,792 2 Persephone 1H Ring Energy 1,278 7,067 3 University JV 14 3H Pacesetter 1,274 10, UL 14 Conway 1421H Lime Rock 1,097 4,206 5 Fisher 9A 2H Lime Rock 925 4, True Grit 1H Parallel 921 4,309 7 University 14Q 2H Ring Energy 900 4, Proserpina 1H Ring Energy 886 6,991 9 Venus 1H Ring Energy 873 4, Ceto 1H Ring Energy 816 4, Vulcan 1H Ring Energy 751 3, Underwood D 3H Ring Energy 748 (1) 4, University 14Q 1H Ring Energy 740 4, Ceres 1H Ring Energy 690 4, Stark 1H Lime Rock 670 4, Fisher Greaves 5 6H Lime Rock 595 4, Fisher 76C 6H Lime Rock 577 5, Virtus 1H Ring Energy 425 4,807 Ring Energy Acreage Acquired Acreage (1) Represents Bo/d Source: DrillingInfo 5

6 Accretive to Key Per Share Metrics Accretion Metrics 3P PV-10 ($MM) 3P PV-10 ($MM) Shares Outstanding (MM) Ring Standalone (1) $ Acquisitions (2) $ $104 Pro Forma $ $613 (Per Share) 3P PV-10 Ring Standalone $8.39 $508 Pro Forma / Share $9.70 Implied Share Accretion 16% Ring Potential Hz CBP Locations Acquisitions Potential Hz Locations Shares Outstanding (MM) 55 Ring Standalone (3) Acquisitions (4) Pro Forma (1) Ring proved PV-10 as of 12/31/2017 based on CGA and probable & possible PV-10 based on Ring internal engineering report using average prices of $47.93 per barrel of oil / $3.61 per Mcf of natural gas (2) Acquired 3P PV-10 as of 11/1/2018 based on internal estimates of 31 3P locations on flat $47.50 per barrel of oil / $2.50 per Mcf of natural gas (3) Ring locations as of 12/31/2017 based on CGA & Ring internal estimates (4) Acquired locations as of 11/1/2018 based on Ring internal estimates Ring 841 Acquisitions 6

7 Significant Value at an Attractive Price Flat $45.00/$2.50 (1) Flat $47.50/$2.50 (1) Flat $50.00/$2.50 (1) Immediately Accretive at Combined ~$15.7MM Purchase Price $86.5 $180.0MM $36.9 $28.8 $94.8 $199.2MM $41.3 $32.2 $104.0 $219.5MM $45.6 $35.7 $27.7 $30.9 $34.2 Pricing Scenario (1) : Flat $45.00/$2.50 Flat $47.50/$2.50 Flat $50.00/$2.50 PV-10 ($MM) $/Share (2) PV-10 ($MM) $/Share (2) PV-10 ($MM) $/Share (2) Proved $36.9 $0.58 $41.3 $0.65 $45.6 $0.72 Probable $28.8 $0.46 $32.2 $0.51 $35.7 $0.56 Possible $27.7 $0.44 $30.9 $0.49 $34.2 $0.54 Total 3P $93.5 $1.48 $104.5 $1.65 $115.5 $1.83 Potential $86.5 $1.37 $94.8 $1.50 $104.0 $1.65 Total $180.0 $2.85 $199.2 $3.15 $219.5 $3.48 (1) Prices shown are realized prices per Bbl and Mcf, respectively (2) Based on pro forma share count of 63.1 million shares outstanding Note: Acquired 3P PV-10 as of 11/1/2018 based on Ring internal estimates 7

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