November 29, 2022, ST. PETERSBURG, FL – Water Tower Research (www.watertowerresearch.com) has published an Initiation of Coverage Report on Ring Energy, Inc. (NYSEAMERICAN: REI) titled, “Stronghold Assets Add Permian Scale and Free Cash Flow Generation Potential”. The report can be accessed here.

Ring Energy is a growth-oriented oil and natural gas exploration and production company headquartered in The Woodlands, Texas. All the company’s assets are in the Permian Basin of West Texas and Southeast New Mexico. Specifically, Ring targets conventional oil reservoirs on the Northwest Shelf and Central Basin Platform portions of the basin.

Ring closed the $465-million acquisition of producing assets from privately owned Stronghold Energy II Operating, LLC and Stronghold Energy II Royalties, LP on August 31, 2022. The acquisition added producing properties primary located in Crane County, Texas on the southern portion of the Central Basin Platform. The acquired assets provide substantial scale and position the company to generate significant free cash flow in 2023. Management’s first priority for free cash flow is to deleverage the balance sheet.

Pro forma proved reserves increased ~90% to 87 MMBOE (June 1) and 4Q22 estimated production is expected to double from the Ring standalone. Importantly, the Stronghold assets bring an inventory of ~500 development projects to Ring’s asset base, complementing the company’s legacy horizontal development program targeting the prolific San Andres Formation.

Ring’s management estimates 4Q22 production will fall in the 18,000-19,000 BOE/d range. 3Q22 production, including one month of volumes from the Stronghold assets, averaged 13,278 BOE/d. Management’s preliminary 2023 operating plan is to maintain or slightly grow production from 4Q22 levels. On an EV/EBITDAX basis, Ring is trading at 2.8x our 2023 estimates.

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