RING ENERGY RELEASES FOURTH QUARTER AND FULL YEAR 2025 RESULTS, YEAR-END 2025 PROVED RESERVES, AND PROVIDES 2026 GUIDANCE
The Woodlands, TX – March 4, 2026 – Ring Energy, Inc. (NYSE American: REI) (“Ring” or the “Company”) today reported operational and financial results for the fourth quarter and full year 2025, year-end 2025 proved reserves and provided 2026 operational and financial guidance.
Fourth Quarter 2025 Highlights
•Sold 13,124 barrels of oil per day (“Bo/d”), near the mid-point of guidance and 20,508 barrels of oil equivalent per day (“Boe/d”) which was above the mid-point of guidance;
•Reported a net loss of $12.8 million, or $(0.06) per diluted share, which included a $35.9 million of non-cash ceiling test impairment, and Adjusted Net Income1 of $3.6 million, or $0.02 per diluted share;
•Remained cash flow positive for the 25th consecutive quarter, generating Adjusted Free Cash Flow (“AFCF”)1 of $5.7 million;
•Reduced debt $8.0 million after retiring a $10.0 million deferred payment obligation;
•Lowered Lease Operating Expense (“LOE”) to $10.02 per Boe, 7% below the low end of guidance; and
•Capital expenditures of $24.3 million, which was within guidance;
Full Year 2025 Highlights
•Increased sales volumes year-over-year (“YoY”) by 3% to a record 20,253 Boe/d with oil sales essentially flat at 13,263 Bo/d;
•Reported a net loss of $34.7 million, or $(0.17) per diluted share, which included a $108.8 million non-cash ceiling test impairment, and Adjusted Net Income1 of $38.4 million, or $0.19 per diluted share;
•Generated record Adjusted Free Cash Flow1 of $50.1 million, despite an 18% reduction in realized prices, and remained cash flow positive for over 6 consecutive years;
•Proved reserves increased by 14%, or 19.1 MMBoe, to 153.3 MMBoe;
•Decreased capital expenditures by 35% YoY to $98.2 million;
•Paid down $40.0 million of debt since closing the acquisition of Central Basin Platform (“CBP”) assets from Lime Rock Resources IV, LP (“Lime Rock”) on March 31, 2025;
•Reaffirmed the borrowing base at $585 million, exited 2025 with ~$166 million of liquidity, and borrowings of $420 million; and
•Fully integrated Lime Rock acquisition with production, capex and LOE beating expectations to date.
2026 Outlook
•Targeting essentially flat sales from the prior year after the disposition of approximately 200 Boe/d of non-operated production;
◦Production midpoint of 20,150 Boe/d and 12,950 Bo/d
•Disciplined capital spending program with a midpoint of $115 million;
◦Total wells drilled, completed and online (midpoint) of ~28 wells.
_______________________________________
1. Non-GAAP financial measure. Please see “Non-GAAP Financial Information” at the end of this release for details and reconciliations of GAAP to Non-GAAP.
1
Management Commentary
Mr. Paul D. McKinney, Chairman of the Board and Chief Executive Officer, commented:
“Ring Energy delivered strong operational and financial results in 2025, demonstrating the effectiveness of our disciplined, value focused strategy. While the year presented significant challenges across the oil and gas sector, including a roughly 18% year over year decline in realized prices, we responded decisively early in the first quarter. By adjusting our drilling plans, reducing our capital spending, focusing investment on our highest return opportunities and taking advantage of the production from the Lime Rock acquisition, we protected margins, improved efficiency, and performed well despite a volatile macroeconomic backdrop.
Overall, Ring increased production by 3% year over year, and in the last six months, we reduced our lease operating expenses by approximately $1.4 million per month – an 18% reduction2. In addition to the new reserves added by the Lime Rock transaction, we replaced 169% of our 2025 production organically which contributed to our strong 14% increase in year-over-year reserves.
These operational improvements drove strong financial results. We generated a record $50 million of Adjusted Free Cash Flow, a 15% increase year over year, paid down $40 million of debt since closing the Lime Rock acquisition, and paid the $10 million deferred cash payment for the Lime Rock acquisition. Importantly, we extended our record to 25 consecutive quarters of positive cash flow generation. Our consistent execution continues to support sustainable free cash flow across commodity cycles.”
Mr. McKinney concluded, “In 2026, we are focused on improving capital efficiency through cost reductions, improving the horizontal mix of our capital program, and drilling longer lateral wells. At a $60 oil price, we intend to maintain production, reduce debt, and continue growing our inventory and reserves. If prices continue above $60, we will accelerate debt reduction. On behalf of the Board and management team, we thank our employees for their disciplined execution in 2025 and look forward to our continued success and creating value for our stockholders in 2026.”
Summary Results
Quarter
Year
Q4 2025
Q3 2025
Q4 2025 to Q3 2025 % Change
Q4 2024
Q4 2025 to Q4 2024 % Change
FY 2025
FY 2024
FY % Change
Average Daily Sales Volumes (Boe/d)
20,508
20,789
(1)%
19,658
4%
20,253
19,648
3%
Crude Oil (Bo/d)
13,124
13,332
(2)%
12,916
2%
13,263
13,283
—%
Net Sales (MBoe)
1,886.8
1,912.6
(1)%
1,808.5
4%
7,392.5
7,191.1
3%
Realized Price - All Products ($/Boe)
$35.45
$41.10
(14)%
$46.14
(23)%
$41.55
$50.94
(18)%
Realized Price - Crude Oil ($/Bo)
$57.47
$64.32
(11)%
$68.98
(17)%
$63.53
$74.87
(15)%
Revenues ($MM)
$66.9
$78.6
(15)%
$83.4
(20)%
$307.2
$366.3
(16)%
Net Income (Loss) ($MM)
$(12.8)
$(51.6)
75%
$5.7
(325)%
$(34.7)
$67.5
(151)%
Adjusted Net Income1 ($MM)
$3.6
$13.1
(73)%
$12.3
(71)%
$38.4
$69.5
(45)%
Adjusted EBITDA1 ($MM)
$38.4
$47.7
(19)%
$50.9
(25)%
$184.0
$233.3
(21)%
Capital Expenditures ($MM)
$24.3
$24.6
(1)%
$37.6
(35)%
$98.2
$151.9
(35)%
Adjusted Free Cash Flow1 ($MM)
$5.7
$13.9
(59)%
$4.7
21%
$50.1
$43.6
15%
Adjusted Net Income, Adjusted EBITDA, and Adjusted Free Cash Flow are non-GAAP financial measures, which are described in more detail and reconciled to the most comparable GAAP measures, in the tables shown later in this release under “Non-GAAP Financial Information.” In addition, see section titled “Condensed Operating Data” for additional details concerning costs and expenses discussed below.
_______________________________________
2. Based on the comparison of the pro forma lease operating expenses of Ring and Lime Rock during the six months prior to the closing date of the Lime Rock acquisition and the last six months of the period.
Realized gain (loss) on derivative contracts ($MM)
$2.7
$2.5
8%
$0.7
286%
$5.5
$(5.2)
206%
Unrealized gain (loss) on derivative contracts ($MM)
$14.8
$(2.1)
805%
$(7.0)
311%
$26.2
$2.8
836%
(1) A summary listing of the Company’s outstanding derivative positions at December 31, 2025 is included in the tables shown later in this release. For full year 2026, the Company currently has approximately 2.3 million barrels of oil (approximately 48% of oil sales guidance midpoint) hedged at an average downside protection price of $65.21 and approximately 4.7 billion cubic feet of natural gas (approximately 66% of natural gas sales guidance midpoint) hedged at an average downside protection price of $3.79.
Balance Sheet and Liquidity: Total liquidity at December 31, 2025 was $165.9 million, a 5% increase from September 30, 2025 and a 24% decrease from December 31, 2024. Liquidity at December 31, 2025 consisted of cash and cash equivalents of $0.9 million and $165.0 million of availability under Ring’s revolving credit facility, which includes a reduction of $35 thousand for letters of credit. On December 31, 2025, the Company had $420.0 million in borrowings outstanding on its revolving credit facility that has a current borrowing base of $585.0 million. Ring paid down $8 million of debt during the fourth quarter of 2025 and $40.0 million since the closing of the Lime Rock Acquisition in March 2025. The Company is targeting further debt reduction during 2026 dependent on market conditions, the timing of capital spending, and other considerations.
During the fourth quarter of 2025, the Company’s borrowing base of $585 million under its revolving credit facility was reaffirmed. The next regularly scheduled bank redetermination is scheduled to occur during May 2026. Ring is currently in compliance with all applicable covenants under its revolving credit facility.
Ceiling Test Impairment
The Company accounts for its assets under the full cost method of accounting, which requires calculation of the limitation on capitalized costs (the full cost ceiling) each quarter. Due to a decrease in the twelve month average commodity pricing, the Company recorded a non-cash impairment charge of $35.9 million in the fourth quarter of 2025. This non-cash charge had no net impact on cash flows.
3
Drilling and Completion Activity
In 4Q 2025 the Company finished drilling and completed a 1.5-mile horizontal well in the Northwest Shelf in which drilling began in the third quarter of 2025. The Company drilled and completed two additional 1-mile horizontal wells in the Central Basin Platform, one in Andrews County and one in Crane County (both with a working interest of 100%). Also in Crane County the Company drilled and completed one vertical well (with a working interest of 100%).
The table below sets forth Ring’s drilling and completions activities by quarter for 2025 and for the full year:
Quarter
Area
Wells Drilled
Wells Completed
1Q 2025
Northwest Shelf (Horizontal)
4
4
Central Basin Platform (Vertical)
3
3
Total
7
7
2Q 2025
Central Basin Platform (Horizontal)
1
1
Central Basin Platform (Vertical)
1
1
Total
2
2
3Q 2025
Central Basin Platform (Horizontal)
4
4
Central Basin Platform (Vertical)
1
1
Total
5
5
4Q 2025
Northwest Shelf (Horizontal)
1
1
Central Basin Platform (Horizontal)
2
2
Central Basin Platform (Vertical)
1
1
Total
4
4
FY 2025
Northwest Shelf (Horizontal)
5
5
Central Basin Platform (Horizontal)
7
7
Central Basin Platform (Vertical)
6
6
Total
18
18
4
2026 Capital Investment, Sales Volumes, and Operating Expense Guidance
Sales volumes for the first quarter 2026 were temporarily impacted by a winter storm reducing volumes over a five day period. Oil sales reduction was approximately 39,050 Bo (430 Bo/d), and Boe sales reduction was approximately 48,250 Boe (540 Boe/d). All production has been restored. Additionally, Ring Energy sold approximately 150 Bo/d or 200 Boe/d of non-operated production.
The guidance in the table below represents the Company's current good faith estimate of the range of likely future results. Guidance could be affected by the factors discussed below in the "Safe Harbor Statement" section.
Q1 2026
Q2 2026
Q3 2026
Q4 2026
FY 2026
Sales Volumes:
Total Oil (Bo/d)
12,100 – 12,500
12,450 – 13,450
12,750 – 13,750
12,800 – 13,800
12,500 – 13,400
Midpoint (Bo/d)
12,300
12,950
13,250
13,300
12,950
Total (Boe/d)
19,100-19,600
19,400 – 21,000
19,700 – 21,300
19,800 – 21,400
19,500 - 20,800
Midpoint (Boe/d)
19,350
20,200
20,500
20,600
20,150
Oil (%)
64%
64%
65%
65%
64%
NGLs (%)
20%
20%
20%
20%
20%
Gas (%)
16%
16%
15%
15%
16%
Capital Program:
Capital spending(1)(2) (millions)
$28 - $34
$28 - $36
$27 - $35
$17 - $25
$100 - $130
Midpoint (millions)
$31
$32
$31
$21
$115
New Hz wells drilled
5 - 6
5 - 7
5 - 7
3 - 5
18 - 25
New Vertical wells drilled
1
1 - 2
1 - 2
1
4 - 6
Completion of DUC wells
1
0
0
0
1
Wells completed and online
7 - 8
6 - 9
6 - 9
4 - 6
23 - 32
Operating Expenses:
LOE (per Boe)
$10.75 - $11.25
$10.05 - $11.05
$10.00 - $11.00
$10.00 - $11.00
$10.15 - $11.15
Midpoint (per Boe)
$11.00
$10.55
$10.50
$10.50
$10.65
(1) In addition to Company-directed drilling and completion activities, the capital spending outlook includes funds for targeted well recompletions, capital workovers, infrastructure upgrades and well reactivations. Also included is anticipated spending for leasing acreage and non-operated drilling, completion, capital workovers, and facility improvements.
(2) Based on the $115 million midpoint of spending guidance, the Company expects the following estimated allocation of capital investment:
•68% for drilling, completion, and related infrastructure, and conversions;
•26% for recompletions and capital workovers;
•5% for land and non-operated capital; and
•1% for environmental and emission reducing facility upgrades.
Year-End 2025 Proved Reserves
The Company's year-end 2025 SEC proved reserves were 153.3 MMBoe, up 14% compared to 134.2 MMBoe at year-end 2024. During 2025, Ring recorded reserve additions of 14.0 MMBoe for acquisitions, 11.2 MMBoe for extensions, discoveries and improved recovery, and 1.3 MMBoe of positive revisions related to changes in pricing and performance. Offsetting these additions was 7.4 MMBoe of production.
The SEC twelve-month first day of the month average prices used for year-end 2025 were $61.82 per barrel of crude oil and $3.387 per MMBtu of natural gas, both before adjustment for quality, transportation, fees, energy content, and regional price differentials, while for year-end 2024 they were $71.96 per barrel of crude oil and $2.130 per MMBtu of natural gas — a decrease of 14% and an increase of 59%, respectively.
5
Year-end 2025 SEC proved reserves were comprised of approximately 59% crude oil, 19% natural gas, and 22% natural gas liquids. At year end, approximately 68% of 2025 proved reserves were classified as proved developed and 32% as proved undeveloped. This is compared to year-end 2024 when approximately 69% of proved reserves were classified as proved developed and 31% were classified as proved undeveloped. The Company’s year-end 2025 proved reserves were prepared by Cawley, Gillespie & Associates, Inc., an independent petroleum engineering firm.
The PV-10 value at year-end 2025 was $1,318.2 million versus $1,462.8 million at the end of 2024.
Oil (Bbl)
Gas (Mcf)
Natural Gas Liquids (Bbl)
Net (Boe)
PV-10(1)
Balance, December 31, 2024
80,904,071
149,817,162
28,303,085
134,176,684
$
1,462,827,136
Purchase of minerals in place
9,915,483
10,067,543
2,373,336
13,966,743
Extensions, discoveries and improved recovery
7,281,553
10,624,783
2,133,786
11,186,136
Sales of minerals in place
—
—
—
—
Production
(4,841,164)
(6,980,958)
(1,387,818)
(7,392,476)
Revisions of previous quantity estimates
(2,939,895)
12,652,046
2,171,955
1,340,734
Balance, December 31, 2025
90,320,048
176,180,576
33,594,344
153,277,821
$
1,318,208,128
(1) PV-10 is a non-GAAP financial measure and is derived from the Standardized Measure of Discounted Future Net Cash Flows, which is the most directly comparable generally accepted accounting principles in the United States (“GAAP”) measure.
In accordance with guidelines established by the SEC, estimated proved reserves as of December 31, 2025 were determined to be economically producible under existing economic conditions, which requires the use of the 12-month average commodity price for each product, calculated as the unweighted arithmetic average of the first-day-of-the-month price for the year ended December 31, 2025. The SEC average prices used for year-end 2025 were $61.82 per barrel of crude oil (WTI) and $3.387 per MMBtu of natural gas (Henry Hub), both before adjustment for quality, transportation, fees, energy content, and regional price differentials. Such prices were held constant throughout the estimated lives of the reserves. Future production and development costs are based on year-end costs with no escalations.
Standardized Measure of Discounted Future Net Cash Flows
Ring’s standardized measure of discounted future net cash flows relating to proved oil and natural gas reserves and changes in the standardized measure as described below were prepared in accordance with GAAP.
As of December 31,
2025
2024
Future cash inflows
$
5,976,599,552
$
6,165,487,616
Future production costs
(2,473,482,048)
(2,432,555,200)
Future development costs (1)
(573,423,296)
(536,825,664)
Future income taxes
(402,808,797)
(465,768,645)
Future net cash flows
2,526,885,411
2,730,338,107
10% annual discount for estimated timing of cash flows
(1,403,392,079)
(1,497,401,764)
Standardized Measure of Discounted Future Net Cash Flows
$
1,123,493,332
$
1,232,936,343
(1) Future development costs include not only development costs but also future asset retirement costs.
6
Reconciliation of PV-10 to Standardized Measure
PV-10 is derived from the Standardized Measure of Discounted Future Net Cash Flows (“Standardized Measure”), which is the most directly comparable GAAP financial measure for proved reserves calculated using SEC pricing. PV-10 is a computation of the Standardized Measure on a pre-tax basis. PV-10 is equal to the Standardized Measure at the applicable date, before deducting future income taxes, discounted at 10 percent. We believe that the presentation of PV-10 is relevant and useful to investors because it presents the discounted future net cash flows attributable to our estimated net proved reserves prior to taking into account future corporate income taxes, and it is a useful measure for evaluating the relative monetary significance of our oil and natural gas properties. Further, investors may utilize the measure as a basis for comparison of the relative size and value of our reserves to other companies without regard to the specific tax characteristics of such entities. Moreover, GAAP does not provide a measure of estimated future net cash flows for reserves other than proved reserves or for reserves calculated using prices other than SEC prices. We use this measure when assessing the potential return on investment related to our oil and natural gas properties. PV-10, however, is not a substitute for the Standardized Measure. Our PV-10 measure and the Standardized Measure do not purport to represent the fair value of our oil and natural gas reserves.
The following table reconciles the PV-10 value of the Company’s estimated proved reserves as of December 31, 2025 to the Standardized Measure:
SEC Pricing Proved Reserves
Standardized Measure Reconciliation
Present value of estimated future net revenues (PV-10)
$
1,318,208,128
Future income taxes, discounted at 10%
194,714,796
Standardized measure of discounted future net cash flows
$
1,123,493,332
7
Conference Call Information
Ring will hold a conference call on Thursday, March 5, 2026 at 11:00 a.m. ET (10:00 a.m. CT) to discuss its fourth quarter and full year 2025 operational and financial results. An updated investor presentation will be posted to the Company’s website prior to the conference call.
To participate in the conference call, interested parties should dial 833-953-2433 at least five minutes before the call is to begin. Please reference the “Ring Energy 2025 Earnings Conference Call”. International callers may participate by dialing 412-317-5762. The call will also be webcast and available on Ring’s website at www.ringenergy.com under “Investors” on the “News & Events” page. An audio replay will also be available on the Company’s website following the call.
About Ring Energy, Inc.
Ring Energy, Inc. is an oil and gas exploration, development, and production company with current operations focused on the development of its Permian Basin assets. For additional information, please visit www.ringenergy.com.
Safe Harbor Statement
This release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements involve a wide variety of risks and uncertainties, and include, without limitation, statements with respect to the Company’s strategy and prospects. The forward-looking statements include statements about the expected future reserves, production, financial position, business strategy, revenues, earnings, costs, capital expenditures and debt levels of the Company and plans and objectives of management for future operations. Forward-looking statements also include assumptions and projections for quarterly and full year 2026 guidance for sales volumes, oil, NGL and natural gas mix as a percentage of total sales, capital expenditures, operating expenses and the projected impacts thereon. Forward-looking statements are based on current expectations and assumptions and analyses made by the Company and its management in light of their experience and perception of historical trends, current conditions and expected future developments, as well as other factors appropriate under the circumstances. However, whether actual results and developments will conform to expectations is subject to a number of material risks and uncertainties, including but not limited to: declines in oil, natural gas liquids or natural gas prices; the level of success in exploration, development and production activities; adverse weather conditions that may negatively impact development or production activities, particularly in the winter; the timing of exploration and development expenditures; inaccuracies of reserve estimates or assumptions underlying them; revisions to reserve estimates as a result of changes in commodity prices; impacts to financial statements as a result of impairment write-downs; risks related to level of indebtedness and periodic redeterminations of the borrowing base and interest rates under the Company’s credit facility; Ring’s ability to generate sufficient cash flows from operations to meet the internally funded portion of its capital expenditures budget; the impacts of hedging on results of operations; changes in U.S. energy, environmental, monetary, tax and trade policies, including with respect to tariffs or other trade barriers, and any resulting trade tensions; cost and availability of transportation and storage capacity as a result of oversupply, government regulation or other factors; and Ring’s ability to replace oil and natural gas reserves. Such statements are subject to certain risks and uncertainties which are disclosed in the Company’s reports filed with the Securities and Exchange Commission (“SEC”), including its Form 10-K for the fiscal year ended December 31, 2025, and its other SEC filings. The Company undertakes no obligation to revise or update publicly any forward-looking statements except as required by law.
Contact Information
Al Petrie Advisors
Al Petrie, Senior Partner
Phone: 281-975-2146
Email: apetrie@ringenergy.com
8
RING ENERGY, INC.
Condensed Statements of Operations
(Unaudited)
Three Months Ended
Twelve Months Ended
December 31,
September 30,
December 31,
December 31,
December 31,
2025
2025
2024
2025
2024
Oil, Natural Gas, and Natural Gas Liquids Revenues
$
66,882,770
$
78,601,336
$
83,440,546
$
307,178,072
$
366,327,414
Costs and Operating Expenses
Lease operating expenses
18,911,801
20,518,472
20,326,216
79,353,806
78,310,949
Gathering, transportation and processing costs
121,097
126,569
130,230
585,087
506,333
Ad valorem taxes
2,279,266
2,446,565
2,421,595
7,906,586
8,069,064
Oil and natural gas production taxes
3,224,183
3,670,987
3,857,147
14,312,232
16,116,565
Depreciation, depletion and amortization
23,002,908
25,225,345
24,548,849
96,414,150
98,702,843
Ceiling test impairment
35,913,116
72,912,330
—
108,825,446
—
Asset retirement obligation accretion
390,892
390,563
323,085
1,490,255
1,380,298
Operating lease expense
175,090
175,091
175,090
700,362
700,362
General and administrative expense
8,030,310
8,139,771
8,035,977
31,928,576
29,640,300
Total Costs and Operating Expenses
92,048,663
133,605,693
59,818,189
341,516,500
233,426,714
Income (Loss) from Operations
(25,165,893)
(55,004,357)
23,622,357
(34,338,428)
132,900,700
Other Income (Expense)
Interest income
56,910
74,253
124,765
290,879
491,946
Interest (expense)
(9,122,419)
(10,052,320)
(10,112,496)
(40,430,929)
(43,311,810)
Gain (loss) on derivative contracts
17,495,270
444,305
(6,254,448)
31,658,839
(2,365,917)
Gain (loss) on disposal of assets
60,855
105,642
—
446,400
89,693
Other income
29,582
—
80,970
189,294
106,656
Net Other Income (Expense)
8,520,198
(9,428,120)
(16,161,209)
(7,845,517)
(44,989,432)
Income (Loss) Before Benefit from (Provision for) Income Taxes
(16,645,695)
(64,432,477)
7,461,148
(42,183,945)
87,911,268
Benefit from (Provision for) Income Taxes
3,800,401
12,800,947
(1,803,629)
7,452,746
(20,440,954)
Net Income (Loss)
$
(12,845,294)
$
(51,631,530)
$
5,657,519
$
(34,731,199)
$
67,470,314
Basic Earnings (Loss) per Share
$
(0.06)
$
(0.25)
$
0.03
$
(0.17)
$
0.34
Diluted Earnings (Loss) per Share
$
(0.06)
$
(0.25)
$
0.03
$
(0.17)
$
0.34
Basic Weighted-Average Shares Outstanding
207,233,067
206,688,003
198,166,543
204,984,223
197,937,683
Diluted Weighted-Average Shares Outstanding
207,233,067
206,688,003
200,886,010
204,984,223
200,277,380
9
RING ENERGY, INC.
Condensed Operating Data
(Unaudited)
Three Months Ended
Twelve Months Ended
December 31,
September 30,
December 31,
December 31,
December 31,
2025
2025
2024
2025
2024
Net sales volumes:
Oil (Bbls)
1,207,425
1,226,537
1,188,272
4,841,164
4,861,628
Natural gas (Mcf)
1,808,355
1,853,599
1,683,793
6,980,958
6,423,674
Natural gas liquids (Bbls)
377,937
377,141
339,589
1,387,818
1,258,814
Total oil, natural gas and natural gas liquids (Boe)(1)
1,886,755
1,912,611
1,808,493
7,392,476
7,191,054
% Oil
64
%
64
%
66
%
65
%
68
%
% Natural gas
16
%
16
%
15
%
16
%
15
%
% Natural gas liquids
20
%
20
%
19
%
19
%
17
%
Average daily sales volumes:
Oil (Bbls/d)
13,124
13,332
12,916
13,263
13,283
Natural gas (Mcf/d)
19,656
20,148
18,302
19,126
17,551
Natural gas liquids (Bbls/d)
4,108
4,099
3,691
3,802
3,439
Average daily equivalent sales (Boe/d)
20,508
20,789
19,658
20,253
19,648
Average realized sales prices:
Oil ($/Bbl)
$
57.47
$
64.32
$
68.98
$
63.53
$
74.87
Natural gas ($/Mcf)
(2.49)
(1.22)
(0.96)
(1.33)
(1.44)
Natural gas liquids ($/Bbls)
5.29
5.22
9.08
6.43
9.23
Barrel of oil equivalent ($/Boe)
$
35.45
$
41.10
$
46.14
$
41.55
$
50.94
Average costs and expenses per Boe ($/Boe):
Lease operating expenses
$
10.02
$
10.73
$
11.24
$
10.73
$
10.89
Gathering, transportation and processing costs
$
0.06
$
0.07
$
0.07
$
0.08
$
0.07
Ad valorem taxes
$
1.21
$
1.28
$
1.34
$
1.07
$
1.12
Oil and natural gas production taxes
$
1.71
$
1.92
$
2.13
$
1.94
$
2.24
Depreciation, depletion and amortization
$
12.19
$
13.19
$
13.57
$
13.04
$
13.73
Ceiling test impairment
$
19.03
$
38.12
$
—
$
14.72
$
—
Asset retirement obligation accretion
$
0.21
$
0.20
$
0.18
$
0.20
$
0.19
Operating lease expense
$
0.09
$
0.09
$
0.10
$
0.09
$
0.10
G&A (including share-based compensation)
$
4.26
$
4.26
$
4.44
$
4.32
$
4.12
G&A (excluding share-based compensation)
$
3.47
$
3.41
$
3.52
$
3.49
$
3.36
G&A (excluding share-based compensation and transaction costs)
$
3.46
$
3.41
$
3.51
$
3.49
$
3.35
(1) Boe is determined using the ratio of six Mcf of natural gas to one Bbl of oil (totals may not compute due to rounding.) The conversion ratio does not assume price equivalency and the price on an equivalent basis for oil, natural gas, and natural gas liquids may differ significantly.
10
RING ENERGY, INC.
Condensed Balance Sheets
As of December 31,
2025
2024
ASSETS
Current Assets
Cash and cash equivalents
$
902,913
$
1,866,395
Accounts receivable
30,938,908
36,172,316
Joint interest billing receivables, net
1,623,991
1,083,164
Derivative assets
21,468,134
5,497,057
Inventory
5,312,715
4,047,819
Prepaid expenses and other assets
1,822,751
1,781,341
Total Current Assets
62,069,412
50,448,092
Properties and Equipment
Oil and natural gas properties, full cost method
1,891,510,431
1,809,309,848
Financing lease asset subject to depreciation
3,633,586
4,634,556
Fixed assets subject to depreciation
3,504,788
3,389,907
Total Properties and Equipment
1,898,648,805
1,817,334,311
Accumulated depreciation, depletion and amortization
(569,180,901)
(475,212,325)
Net Properties and Equipment
1,329,467,904
1,342,121,986
Operating lease asset
1,285,159
1,906,264
Derivative assets
9,739,430
5,473,375
Deferred financing costs
9,337,344
8,149,757
Total Assets
$
1,411,899,249
$
1,408,099,474
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current Liabilities
Accounts payable
$
97,522,809
$
95,729,261
Income tax liability
356,436
328,985
Financing lease liability
730,564
906,119
Operating lease liability
586,614
648,204
Derivative liabilities
841,193
6,410,547
Notes payable
505,752
496,397
Asset retirement obligations
418,526
517,674
Total Current Liabilities
100,961,894
105,037,187
Non-current Liabilities
Deferred income taxes
20,764,119
28,591,802
Revolving line of credit
420,000,000
385,000,000
Financing lease liability, less current portion
593,146
647,078
Operating lease liability, less current portion
819,223
1,405,837
Derivative liabilities
2,512,692
2,912,745
Asset retirement obligations
29,972,429
25,864,843
Total Liabilities
575,623,503
549,459,492
Commitments and contingencies
Stockholders' Equity
Preferred stock - $0.001 par value; 50,000,000 shares authorized; no shares issued or outstanding
—
—
Common stock - $0.001 par value; 450,000,000 shares authorized; 207,656,929 shares and 198,561,378 shares issued and outstanding, respectively
207,657
198,561
Additional paid-in capital
812,777,586
800,419,719
Retained earnings (Accumulated deficit)
23,290,503
58,021,702
Total Stockholders’ Equity
836,275,746
858,639,982
Total Liabilities and Stockholders' Equity
$
1,411,899,249
$
1,408,099,474
11
RING ENERGY, INC.
Condensed Statements of Cash Flows
(Unaudited)
Three Months Ended
Twelve Months Ended
December 31,
September 30,
December 31,
December 31,
December 31,
2025
2025
2024
2025
2024
Cash Flows From Operating Activities
Net income (loss)
$
(12,845,294)
$
(51,631,530)
$
5,657,519
$
(34,731,199)
$
67,470,314
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation, depletion and amortization
23,002,908
25,225,345
24,548,849
96,414,150
98,702,843
Ceiling test impairment
35,913,116
72,912,330
—
108,825,446
—
Asset retirement obligation accretion
390,892
390,563
323,085
1,490,255
1,380,298
Amortization of deferred financing costs
691,228
693,625
1,299,078
4,459,520
4,969,174
Share-based compensation
1,474,560
1,618,600
1,672,320
6,135,957
5,506,017
Credit loss expense
—
907
(26,747)
19,029
160,847
(Gain) loss on disposal of assets
(60,855)
(105,642)
—
(446,400)
(89,693)
Deferred income tax expense (benefit)
(3,650,179)
(12,964,252)
1,723,338
(7,858,446)
19,935,413
Excess tax expense (benefit) related to share-based compensation
(201,533)
123,533
9,011
30,763
104,344
(Gain) loss on derivative contracts
(17,495,270)
(444,305)
6,254,448
(31,658,839)
2,365,917
Cash received (paid) for derivative settlements, net
2,741,821
2,586,230
745,104
5,452,300
(5,193,673)
Changes in operating assets and liabilities:
Accounts receivable
2,153,443
4,672,943
349,474
4,452,926
3,594,504
Inventory
(327,355)
399,193
580,161
(1,264,896)
2,089,116
Prepaid expenses and other assets
454,986
439,087
295,555
(41,410)
93,509
Accounts payable
12,513,783
841,492
4,462,089
474,744
(5,076,738)
Settlement of asset retirement obligation
(67,428)
(265,794)
(613,603)
(904,493)
(1,588,480)
Net Cash Provided by Operating Activities
44,688,823
44,492,325
47,279,681
150,849,407
194,423,712
Cash Flows From Investing Activities
Payments for the Lime Rock Acquisition
(9,293,884)
(1,709,776)
—
(81,863,429)
—
Payments to purchase oil and natural gas properties
(1,016,517)
(715,126)
(1,423,483)
(2,528,932)
(2,210,826)
Payments to develop oil and natural gas properties
(24,955,052)
(20,995,094)
(36,386,055)
(95,207,027)
(153,945,456)
Payments to acquire or improve fixed assets subject to depreciation
(4,402)
(5,708)
—
(179,771)
(185,524)
Proceeds from sale of fixed assets subject to depreciation
—
—
—
17,360
10,605
Proceeds from divestiture of oil and natural gas properties
—
100
121,232
100
121,232
Proceeds from sale of New Mexico properties
—
—
—
—
(144,398)
Proceeds from sale of CBP vertical wells
—
—
—
—
5,500,000
Insurance proceeds received for damage to oil and natural gas properties
—
160,533
—
260,446
—
Net Cash Used in Investing Activities
(35,269,855)
(23,265,071)
(37,688,306)
(179,501,253)
(150,854,367)
Cash Flows From Financing Activities
Proceeds from revolving line of credit
30,500,000
31,000,000
22,000,000
231,822,997
130,000,000
Payments on revolving line of credit
(38,500,000)
(51,000,000)
(29,000,000)
(196,822,997)
(170,000,000)
Payments for taxes withheld on vested restricted shares, net
(228,359)
(8,000)
—
(1,189,805)
(919,249)
Proceeds from notes payable
—
—
58,774
1,648,539
1,560,281
Payments on notes payable
(496,077)
(486,590)
(475,196)
(1,639,184)
(1,597,618)
Payment of deferred financing costs
66,871
(332,376)
(42,746)
(5,647,107)
(88,450)
Reduction of financing lease liabilities
(145,397)
(113,381)
(265,812)
(484,079)
(954,298)
Net Cash Provided by (Used in) Financing Activities
(8,802,962)
(20,940,347)
(7,724,980)
27,688,364
(41,999,334)
Net Increase (Decrease) in Cash
616,006
286,907
1,866,395
(963,482)
1,570,011
Cash at Beginning of Period
286,907
—
—
1,866,395
296,384
Cash at End of Period
$
902,913
$
286,907
$
1,866,395
$
902,913
$
1,866,395
12
RING ENERGY, INC.
Financial Commodity Derivative Positions
As of December 31, 2025
The following tables reflect the details of current derivative contracts as of December 31, 2025 (quantities are in barrels (Bbl) for the oil derivative contracts and in million British thermal units (MMBtu) for the natural gas derivative contracts).
Oil Hedges (WTI)
Q1 2026
Q2 2026
Q3 2026
Q4 2026
Q1 2027
Q2 2027
Q3 2027
Q4 2027
Swaps:
Hedged volume (Bbl)
608,350
577,101
171,400
529,000
509,500
492,000
432,000
412,963
Weighted average swap price
$
67.95
$
66.50
$
62.26
$
65.34
$
62.82
$
60.45
$
61.80
$
57.59
Two-way collars:
Hedged volume (Bbl)
—
—
379,685
—
—
—
—
—
Weighted average put price
$
—
$
—
$
60.00
$
—
$
—
$
—
$
—
$
—
Weighted average call price
$
—
$
—
$
72.50
$
—
$
—
$
—
$
—
$
—
Gas Hedges (Henry Hub)
Q1 2026
Q2 2026
Q3 2026
Q4 2026
Q1 2027
Q2 2027
Q3 2027
Q4 2027
NYMEX Swaps:
Hedged volume (MMBtu)
448,854
1,165,628
600,016
1,072,305
439,678
423,035
1,079,906
1,046,151
Weighted average swap price
$
4.19
$
3.82
$
4.19
$
3.99
$
4.02
$
4.02
$
3.86
$
4.02
Two-way collars:
Hedged volume (MMBtu)
456,850
139,000
648,728
128,000
717,000
694,000
—
—
Weighted average put price
$
3.50
$
3.50
$
3.10
$
3.50
$
3.99
$
3.00
$
—
$
—
Weighted average call price
$
5.11
$
5.42
$
4.24
$
5.42
$
5.21
$
4.32
$
—
$
—
Gas Hedges (Henry Hub)
Q1 2028
Q2 2028
Q3 2028
Q4 2028
Q1 2029
Q2 2029
Q3 2029
Q4 2029
NYMEX Swaps:
Hedged volume (MMBtu)
1,012,567
984,322
956,865
931,539
908,117
886,933
866,585
846,134
Weighted average swap price
$
3.77
$
3.77
$
3.77
$
3.77
$
3.67
$
3.67
$
3.67
$
3.67
13
Gas Hedges (basis differential)
Q1 2026
Q2 2026
Q3 2026
Q4 2026
Q1 2027
Q2 2027
Q3 2027
Q4 2027
El Paso Permian Basin basis swaps:
Hedged volume (MMBtu)
—
—
—
—
960,307
636,710
615,547
596,306
Weighted average spread price (1)
$
—
$
—
$
—
$
—
$
0.72
$
0.67
$
0.67
$
0.67
Waha basis swaps:
Hedged volume (MMBtu)
—
—
—
—
196,372
480,325
464,360
449,846
Weighted average spread price (1)
$
—
$
—
$
—
$
—
$
0.78
$
0.78
$
0.78
$
0.78
Gas Hedges (basis differential)
Q1 2028
Q2 2028
Q3 2028
Q4 2028
Q1 2029
Q2 2029
Q3 2029
Q4 2029
El Paso Permian Basin basis swaps:
Hedged volume (MMBtu)
577,163
561,064
545,413
530,977
517,628
505,552
493,953
482,296
Weighted average spread price (1)
$
0.60
$
0.60
$
0.60
$
0.60
$
0.57
$
0.57
$
0.57
$
0.57
Waha basis swaps:
Hedged volume (MMBtu)
435,403
423,259
411,453
400,562
390,490
381,381
372,632
363,837
Weighted average spread price (1)
$
0.68
$
0.68
$
0.68
$
0.68
$
0.63
$
0.63
$
0.63
$
0.63
(1) The oil basis swap hedges are calculated as the fixed price (weighted average spread price above) less the difference between WTI Midland and WTI Cushing, in the issue of Argus Americas Crude.
(1) The gas basis swap hedges are calculated as the Henry Hub natural gas price less the fixed amount specified as the weighted average spread price above.
14
RING ENERGY, INC.
Non-GAAP Financial Information
Certain financial information included in this release are not measures of financial performance recognized by accounting principles generally accepted in the United States (“GAAP”). These non-GAAP financial measures are “Adjusted Net Income,” “Adjusted EBITDA,” “Adjusted Free Cash Flow” or “AFCF,” “Adjusted Cash Flow from Operations” or “ACFFO,” “G&A Excluding Share-Based Compensation,” “G&A Excluding Share-Based Compensation and Transaction Costs,” “Leverage Ratio,” “Current Ratio,” “Cash Return on Capital Employed” or “CROCE,” “All-In Cash Operating Costs,” and “Cash Operating Margin.” Management uses these non-GAAP financial measures in its analysis of performance. In addition, Adjusted EBITDA is a key metric used to determine a portion of the Company’s incentive compensation awards. These disclosures may not be viewed as a substitute for results determined in accordance with GAAP and are not necessarily comparable to non-GAAP performance measures which may be reported by other companies.
Reconciliation of Net Income (Loss) to Adjusted Net Income (Loss)
“Adjusted Net Income (Loss)” is calculated as net income (loss) minus the estimated after-tax impact of share-based compensation, ceiling test impairment, unrealized gains and losses on changes in the fair value of derivatives, and transaction costs for acquisitions and divestitures (“A&D”). Adjusted Net Income is presented because the timing and amount of these items cannot be reasonably estimated and affect the comparability of operating results from period to period, and current period to prior periods. The Company believes that the presentation of Adjusted Net Income provides useful information to investors as it is one of the metrics management uses to assess the Company’s ongoing operating and financial performance, and also is a useful metric for investors to compare the Company’s results with its peers.
(Unaudited for All Periods)
Three Months Ended
Twelve Months Ended
December 31,
September 30,
December 31,
December 31,
December 31,
2025
2025
2024
2025
2024
Total
Per share - diluted
Total
Per share - diluted
Total
Per share - diluted
Total
Per share - diluted
Total
Per share - diluted
Net Income (Loss)
$
(12,845,294)
$
(0.06)
$
(51,631,530)
$
(0.25)
$
5,657,519
$
0.03
$
(34,731,199)
$
(0.17)
$
67,470,314
$
0.34
Share-based compensation
1,474,560
0.01
1,618,600
0.01
1,672,320
0.01
6,135,957
0.03
5,506,017
0.03
Ceiling test impairment
35,913,116
0.17
72,912,330
0.35
—
—
108,825,446
0.54
—
—
Unrealized loss (gain) on change in fair value of derivatives
(14,753,449)
(0.07)
2,141,925
0.01
6,999,552
0.03
(26,206,539)
(0.13)
(2,827,756)
(0.02)
Transaction costs - A&D
25,000
—
10
—
21,017
—
27,786
—
24,556
—
Tax impact on adjusted items
(6,213,517)
(0.03)
(11,920,971)
(0.06)
(2,008,740)
(0.01)
(15,670,138)
(0.08)
(628,405)
—
Adjusted Net Income (Loss)
$
3,600,416
$
0.02
$
13,120,364
$
0.06
$
12,341,668
$
0.06
$
38,381,313
$
0.19
$
69,544,726
$
0.35
Diluted Weighted-Average Shares Outstanding
207,233,067
206,688,003
200,886,010
204,984,223
200,277,380
Adjusted Net Income per Diluted Share
$
0.02
$
0.06
$
0.06
$
0.19
$
0.35
15
Reconciliation of Net Income (Loss) to Adjusted EBITDA
The Company defines “Adjusted EBITDA” as net income (loss) plus net interest expense (including interest income and expense), unrealized loss (gain) on change in fair value of derivatives, ceiling test impairment, income tax (benefit) expense, depreciation, depletion and amortization, asset retirement obligation accretion, transaction costs for acquisitions and divestitures (A&D), share-based compensation, loss (gain) on disposal of assets, and backing out the effect of other income. Company management believes Adjusted EBITDA is relevant and useful because it helps investors understand Ring’s operating performance and makes it easier to compare its results with those of other companies that have different financing, capital and tax structures. Adjusted EBITDA should not be considered in isolation from or as a substitute for net income, as an indication of operating performance or cash flows from operating activities or as a measure of liquidity. Adjusted EBITDA, as Ring calculates it, may not be comparable to Adjusted EBITDA measures reported by other companies. In addition, Adjusted EBITDA does not represent funds available for discretionary use.
(Unaudited for All Periods)
Three Months Ended
Twelve Months Ended
December 31,
September 30,
December 31,
December 31,
December 31,
2025
2025
2024
2025
2024
Net Income (Loss)
$
(12,845,294)
$
(51,631,530)
$
5,657,519
$
(34,731,199)
$
67,470,314
Interest expense, net
9,065,509
9,978,067
9,987,731
40,140,050
42,819,864
Unrealized (gain) loss on change in fair value of derivatives
(14,753,449)
2,141,925
6,999,552
(26,206,539)
(2,827,756)
Ceiling test impairment
35,913,116
72,912,330
—
108,825,446
—
Income tax (benefit) expense
(3,800,401)
(12,800,947)
1,803,629
(7,452,746)
20,440,954
Depreciation, depletion and amortization
23,002,908
25,225,345
24,548,849
96,414,150
98,702,843
Asset retirement obligation accretion
390,892
390,563
323,085
1,490,255
1,380,298
Transaction costs - A&D
25,000
10
21,017
27,786
24,556
Share-based compensation
1,474,560
1,618,600
1,672,320
6,135,957
5,506,017
(Gain) loss on disposal of assets
(60,855)
(105,642)
—
(446,400)
(89,693)
Other income
(29,582)
—
(80,970)
(189,294)
(106,656)
Adjusted EBITDA
$
38,382,404
$
47,728,721
$
50,932,732
$
184,007,466
$
233,320,741
Adjusted EBITDA Margin
57
%
61
%
61
%
60
%
64
%
16
Reconciliations of Net Cash Provided by Operating Activities to Adjusted Free Cash Flow and Adjusted EBITDA to Adjusted Free Cash Flow
The Company defines “Adjusted Free Cash Flow” or “AFCF” as Net Cash Provided by Operating Activities (as reflected on the Company’s Condensed Statements of Cash Flows) less changes in operating assets and liabilities, and plus transaction costs for acquisitions and divestitures (“A&D”), current income tax expense (benefit), proceeds from divestitures of equipment for oil and natural gas properties, loss (gain) on disposal of assets, and less capital expenditures, credit loss expense, and other income. For this purpose, the Company’s definition of capital expenditures includes costs incurred related to oil and natural gas properties (such as drilling and infrastructure costs and lease maintenance costs) but excludes acquisition costs of oil and gas properties from third parties that are not included in the Company’s capital expenditures guidance provided to investors. Management believes that Adjusted Free Cash Flow is an important financial performance measure for use in evaluating the performance and efficiency of the Company’s current operating activities after the impact of capital expenditures and net interest expense (including interest income and expense, excluding amortization of deferred financing costs) and without being impacted by items such as changes associated with working capital, which can vary substantially from one period to another. Other companies may use different definitions of Adjusted Free Cash Flow.
(Unaudited for All Periods)
Three Months Ended
Twelve Months Ended
December 31,
September 30,
December 31,
December 31,
December 31,
2025
2025
2024
2025
2024
Net Cash Provided by Operating Activities
$
44,688,823
$
44,492,325
$
47,279,681
$
150,849,407
$
194,423,712
Adjustments - Condensed Statements of Cash Flows
Changes in operating assets and liabilities
(14,727,429)
(6,086,921)
(5,073,676)
(2,716,871)
888,089
Transaction costs - A&D
25,000
10
21,017
27,786
24,556
Income tax expense (benefit) - current
51,311
39,772
71,280
374,937
401,197
Capital expenditures
(24,343,200)
(24,589,282)
(37,633,168)
(98,211,527)
(151,946,171)
Proceeds from divestiture of equipment for oil and natural gas properties
—
100
121,232
100
121,232
Credit loss expense
—
(907)
26,747
(19,029)
(160,847)
Other income
(29,582)
—
(80,970)
(189,294)
(106,656)
Adjusted Free Cash Flow
$
5,664,923
$
13,855,097
$
4,732,143
$
50,115,509
$
43,645,112
(Unaudited for All Periods)
Three Months Ended
Twelve Months Ended
December 31,
September 30,
December 31,
December 31,
December 31,
2025
2025
2024
2025
2024
Adjusted EBITDA
$
38,382,404
$
47,728,721
$
50,932,732
$
184,007,466
$
233,320,741
Net interest expense (excluding amortization of deferred financing costs)
(8,374,281)
(9,284,442)
(8,688,653)
(35,680,530)
(37,850,690)
Capital expenditures
(24,343,200)
(24,589,282)
(37,633,168)
(98,211,527)
(151,946,171)
Proceeds from divestiture of equipment for oil and natural gas properties
—
100
121,232
100
121,232
Adjusted Free Cash Flow
$
5,664,923
$
13,855,097
$
4,732,143
$
50,115,509
$
43,645,112
17
Reconciliation of Net Cash Provided by Operating Activities to Adjusted Cash Flow from Operations
The Company defines “Adjusted Cash Flow from Operations” or “ACFFO” as Net Cash Provided by Operating Activities, as reflected in the Company’s Condensed Statements of Cash Flows, less the changes in operating assets and liabilities, which includes accounts receivable, inventory, prepaid expenses and other assets, accounts payable, and settlement of asset retirement obligations, which are subject to variation due to the nature of the Company’s operations. Accordingly, the Company believes this financial performance measure is useful to investors because it is used often in its industry and allows investors to compare this metric to other companies in its peer group as well as the E&P sector.
(Unaudited for All Periods)
Three Months Ended
Twelve Months Ended
December 31,
September 30,
December 31,
December 31,
December 31,
2025
2025
2024
2025
2024
Net Cash Provided by Operating Activities
$
44,688,823
$
44,492,325
$
47,279,681
$
150,849,407
$
194,423,712
Changes in operating assets and liabilities
(14,727,429)
(6,086,921)
(5,073,676)
(2,716,871)
888,089
Adjusted Cash Flow from Operations
$
29,961,394
$
38,405,404
$
42,206,005
$
148,132,536
$
195,311,801
Reconciliation of General and Administrative Expense (G&A) to G&A Excluding Share-Based Compensation and Transaction Costs
The following table presents a reconciliation of General and Administrative Expense (“G&A”), a GAAP measure, to G&A excluding share-based compensation, and G&A excluding share-based compensation and transaction costs for acquisitions and divestitures (A&D).
(Unaudited for All Periods)
Three Months Ended
Twelve Months Ended
December 31,
September 30,
December 31,
December 31,
December 31,
2025
2025
2024
2025
2024
General and administrative expense (G&A)
$
8,030,310
$
8,139,771
$
8,035,977
$
31,928,576
$
29,640,300
Shared-based compensation
1,474,560
1,618,600
1,672,320
6,135,957
5,506,017
G&A excluding share-based compensation
6,555,750
6,521,171
6,363,657
25,792,619
24,134,283
Transaction costs - A&D
25,000
10
21,017
27,786
24,556
G&A excluding share-based compensation and transaction costs
$
6,530,750
$
6,521,161
$
6,342,640
$
25,764,833
$
24,109,727
18
Calculation of Leverage Ratio
“Leverage” or the “Leverage Ratio” is calculated pursuant to the Company’s existing senior revolving credit facility and means as of any date, the ratio of (i) Consolidated Total Debt as of such date to (ii) Consolidated EBITDAX for the four consecutive fiscal quarters ending on or immediately prior to such date for which financial statements are required to have been delivered under the credit facility.
The Company defines “Consolidated Total Debt” in accordance with its existing senior revolving credit facility and means, as of any date, all Indebtedness of the Company on a consolidated basis as of such date, but excluding hedging obligations.
The Company defines “Indebtedness” in accordance with its existing senior revolving credit facility and generally means (i) all obligations of the Company for borrowed money, (ii) all obligations of the Company evidenced by notes or other similar instruments, (iii) all obligations of the Company in respect of the deferred purchase price of property or services, (iv) all obligations of the Company under any conditional sale relating to property acquired the Company, (v) all capital lease obligations of the Company, (vi) all obligations, contingent or otherwise, of the Company in respect of letters of credit or similar extensions of credit, (vii) all guarantees of the Company of the type of Indebtedness described in clauses (i) through (vi) above, (viii) all Indebtedness of a third party secured by any lien on property owned by the Company, whether or not such Indebtedness has been assumed by the Company, (ix) all off-balance sheet liabilities, (x) all hedging obligations and (xi) the undischarged balance of any production payment created by the Company or for the creation of which the Company directly or indirectly received payment.
The Company defines “Consolidated EBITDAX” in accordance with its existing senior revolving credit facility and means for any period an amount equal to the sum of (i) consolidated net income (loss) for such period plus (ii) to the extent deducted in determining consolidated net income (loss) for such period, and without duplication, (A) consolidated interest expense, (B) income tax expense (benefit) determined on a consolidated basis, (C) depreciation, depletion and amortization determined on a consolidated basis, (D) exploration expenses determined on a consolidated basis, and (E) all other non-cash charges reasonably acceptable to the administrative agent, in each case for such period minus (iii) all noncash income added to consolidated net income (loss) for such period; provided that, for purposes of calculating compliance with the financial covenants under the credit facility, to the extent that during such period the Company has consummated an acquisition permitted by the credit facility or any sale, transfer or other disposition of any property or assets permitted by the credit facility, Consolidated EBITDAX will be calculated on a pro forma basis with respect to the property or assets acquired or disposed of.
The maximum permitted Leverage Ratio under the senior revolving credit facility is 3.00. The following tables show the leverage ratio calculations for the quarters ended December 31, 2025 and December 31, 2024.
19
(Unaudited)
Three Months Ended
March 31,
June 30,
September 30,
December 31,
Last Four Quarters
2025
2025
2025
2025
Consolidated EBITDAX Calculation:
Net Income (Loss)
$
9,110,738
$
20,634,887
$
(51,631,530)
$
(12,845,294)
$
(34,731,199)
Plus: Consolidated interest expense
9,408,728
11,687,746
9,978,067
9,065,509
40,140,050
Plus: Income tax provision (benefit)
3,041,177
6,107,425
(12,800,947)
(3,800,401)
(7,452,746)
Plus: Depreciation, depletion and amortization
22,615,983
25,569,914
25,225,345
23,002,908
96,414,150
Plus: non-cash charges reasonably acceptable to Administrative Agent
2,392,703
(12,236,121)
77,063,418
23,025,119
90,245,119
Consolidated EBITDAX
$
46,569,329
$
51,763,851
$
47,834,353
$
38,447,841
$
184,615,374
Plus: Pro Forma Acquired Consolidated EBITDAX
$
7,392,359
$
—
$
—
$
—
$
7,392,359
Less: Pro Forma Divested Consolidated EBITDAX
8,855
—
—
—
8,855
Pro Forma Consolidated EBITDAX
$
53,970,543
$
51,763,851
$
47,834,353
$
38,447,841
$
192,016,588
Non-cash charges reasonably acceptable to Administrative Agent:
Asset retirement obligation accretion
$
326,549
$
382,251
$
390,563
$
390,892
Unrealized loss (gain) on derivative assets
375,196
(13,970,211)
2,141,925
(14,753,449)
Ceiling test impairment
—
—
72,912,330
35,913,116
Share-based compensation
1,690,958
1,351,839
1,618,600
1,474,560
Total non-cash charges reasonably acceptable to Administrative Agent
$
2,392,703
$
(12,236,121)
$
77,063,418
$
23,025,119
As of
December 31,
Corresponding
2025
Leverage Ratio
Leverage Ratio Covenant:
Revolving line of credit
$
420,000,000
2.19
Notes payable
505,752
—
Capital lease obligations
1,323,710
0.01
Consolidated Total Debt
$
421,829,462
2.20
Pro Forma Consolidated EBITDAX
192,016,588
Leverage Ratio
2.20
Maximum Allowed
≤ 3.00x
20
(Unaudited)
Three Months Ended
March 31,
June 30,
September 30,
December 31,
Last Four Quarters
2024
2024
2024
2024
Consolidated EBITDAX Calculation:
Net Income (Loss)
$
5,515,377
$
22,418,994
$
33,878,424
$
5,657,519
$
67,470,314
Plus: Consolidated interest expense
11,420,400
10,801,194
10,610,539
9,987,731
42,819,864
Plus: Income tax provision (benefit)
1,728,886
6,820,485
10,087,954
1,803,629
20,440,954
Plus: Depreciation, depletion and amortization
23,792,450
24,699,421
25,662,123
24,548,849
98,702,843
Plus: non-cash charges acceptable to Administrative Agent
19,627,646
1,664,064
(26,228,108)
8,994,957
4,058,559
Consolidated EBITDAX
$
62,084,759
$
66,404,158
$
54,010,932
$
50,992,685
$
233,492,534
Plus: Pro Forma Acquired Consolidated EBITDAX
$
—
$
—
$
—
$
—
$
—
Less: Pro Forma Divested Consolidated EBITDAX
(124,084)
(469,376)
(600,460)
77,819
(1,116,101)
Pro Forma Consolidated EBITDAX
$
61,960,675
$
65,934,782
$
53,410,472
$
51,070,504
$
232,376,433
Non-cash charges acceptable to Administrative Agent:
Asset retirement obligation accretion
$
350,834
$
352,184
$
354,195
$
323,085
Unrealized loss (gain) on derivative assets
17,552,980
(765,898)
(26,614,390)
6,999,552
Ceiling test impairment
—
—
—
—
Share-based compensation
1,723,832
2,077,778
32,087
1,672,320
Total non-cash charges acceptable to Administrative Agent
$
19,627,646
$
1,664,064
$
(26,228,108)
$
8,994,957
As of
December 31,
2024
Leverage Ratio Covenant:
Revolving line of credit
$
385,000,000
Pro Forma Consolidated EBITDAX
232,376,433
Leverage Ratio
1.66
Maximum Allowed
≤ 3.00x
21
Calculation of Current Ratio
The “Current Ratio” is calculated under our existing senior revolving credit facility and means as of any date, the ratio of (i) our Current Assets as of such date to (ii) our Current Liabilities as of such date. Based on its credit agreement, the Company defines Current Assets as all current assets, excluding non-cash assets under Accounting Standards Codification (“ASC”) 815, plus the unused line of credit. The Company’s non-cash current assets include the derivative asset marked to market value. Based on its credit agreement, the Company defines Current Liabilities as all liabilities, in accordance with GAAP, which are classified as current liabilities, including all indebtedness payable on demand or within one year, all accruals for federal or other taxes payable within such year, but excluding current portion of long-term debt required to be paid within one year, the aggregate outstanding principal balance and non-cash obligations under ASC 815.
Also set forth in our existing senior revolving credit facility is the minimum permitted Current Ratio of 1.00. The following table shows the Current Ratio calculation for the Company’s most recent fiscal quarter.
As of
December 31,
2025
Current assets
62,069,412
Less: Current derivative assets
21,468,134
Current assets less Current derivative assets
40,601,278
Revolver Availability (Facility less debt less LCs)
164,965,000
Current Assets per Covenant
205,566,278
Current liabilities
100,961,894
Less: Current derivative liabilities
841,193
Current Liabilities per Covenant
100,120,701
Current Ratio
2.05
Minimum Allowed
> or = 1.00x
22
Calculation of Cash Return on Capital Employed
The Company defines “Return on Capital Employed” or “CROCE” as Adjusted Cash Flow from Operations divided by average debt and stockholder equity for the period. Management believes that CROCE is useful to investors as a performance measure when comparing our profitability and the efficiency with which management has employed capital over time relative to other companies. CROCE is not considered to be an alternative to net income reported in accordance with GAAP.
CROCE (Cash Return on Capital Employed):
As of and for the
twelve months ended
December 31,
December 31,
December 31,
2025
2024
2023
Total long term debt (i.e. revolving line of credit)
$420,000,000
$385,000,000
$425,000,000
Total stockholders' equity
$836,275,746
$858,639,982
$786,582,900
Average debt
$402,500,000
$405,000,000
$420,000,000
Average stockholders' equity
847,457,864
822,611,441
723,843,146
Average debt and stockholders' equity
1,249,957,864
1,227,611,441
1,143,843,146
Net Cash Provided by Operating Activities
$150,849,407
$194,423,712
$198,170,459
Less change in WC (Working Capital)
2,716,871
(888,089)
1,180,748
Adjusted Cash Flows From Operations (ACFFO)
$148,132,536
$195,311,801
$196,989,711
CROCE (ACFFO)/(Average D+E)
11.9
%
15.9
%
17.2
%
23
All-In Cash Operating Costs
The Company defines All-In Cash Operating Costs, a non-GAAP financial measure, as “all in cash” costs which includes lease operating expenses, G&A costs excluding share-based compensation, net interest expense (including interest income and expense, excluding amortization of deferred financing costs), workovers and other operating expenses, production taxes, ad valorem taxes, and gathering/transportation costs. Management believes that this metric provides useful additional information to investors to assess the Company’s operating costs in comparison to its peers, which may vary from company to company.
(Unaudited for All Periods)
Three Months Ended
Twelve Months Ended
December 31,
September 30,
December 31,
December 31,
December 31,
2025
2025
2024
2025
2024
All-In Cash Operating Costs:
Lease operating expenses (including workovers)
18,911,801
20,518,472
20,326,216
79,353,806
78,310,949
G&A excluding share-based compensation
6,555,750
6,521,171
6,363,657
25,792,619
24,134,283
Net interest expense (excluding amortization of deferred financing costs)
8,374,281
9,284,442
8,688,653
35,680,530
37,850,690
Operating lease expense
175,090
175,091
175,090
700,362
700,362
Oil and natural gas production taxes
3,224,183
3,670,987
3,857,147
14,312,232
16,116,565
Ad valorem taxes
2,279,266
2,446,565
2,421,595
7,906,586
8,069,064
Gathering, transportation and processing costs
121,097
126,569
130,230
585,087
506,333
All-in cash operating costs
39,641,468
42,743,297
41,962,588
164,331,222
165,688,246
Boe
1,886,755
1,912,611
1,808,493
7,392,476
7,191,054
All-in cash operating costs per Boe
$
21.01
$
22.35
$
23.20
$
22.23
$
23.04
Cash Operating Margin
The Company defines Cash Operating Margin, a non-GAAP financial measure, as realized revenues per Boe less “all-in cash operating costs” per Boe. Management believes that this metric provides useful additional information to investors to assess the Company’s operating margins in comparison to its peers, which may vary from company to company.
