RING ENERGY, INC. current report, 27 February 2014

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Business Context and Reporting Period

Company: Ring Energy, Inc.
Filing Type: Form 8-K (Current Report)
Date of Report: February 27, 2014
Event: Completion of an asset acquisition in the Permian Basin of Texas.

Key Financial Metrics and Transaction Details

  • Transaction Type: Cash acquisition of oil and gas assets.
  • Purchase Price: Approximately $6.45 million in cash.
  • Assets Acquired: Approximately 2,481 gross acres (1,576 net acres) located in Andrews and Gaines Counties, Texas.
  • Asset Composition: 92 separate leases consisting of developed and undeveloped parcels.
  • Production Metrics: Developed area includes approximately 907 net acres with current net production of 42 BOEs (Barrels of Oil Equivalent) per day.
  • Product Mix: Production is over 92% oil.
  • Undeveloped Acreage: Approximately 660 net acres.

Note: This filing does not provide consolidated revenue, profit, cash flow, margin, debt, or liquidity figures for Ring Energy, Inc. as a whole.

Material Changes Versus Prior Period

This filing reports a discrete capital expenditure event (asset acquisition) rather than a comparative financial performance period. The primary material change is the addition of 1,576 net acres to the company's portfolio and the immediate cash outflow of $6.45 million.

Guidance, Outlook, and Management Commentary

  • Significance Test: Management determined the acquisition will not be "significant" based on the company's Year End Financial Statements as of December 31, 2013.
  • Financial Reporting: Consequently, no pro forma financial information or separate financial statements of the acquired business are required to be filed with this report.
  • Strategic Fit: The acquired acreage is in close proximity to Ring's existing Permian Basin assets.

Important Facts for Investor Verification

  • Verify the impact of the $6.45 million cash outflow on the company's current liquidity position.
  • Confirm the "non-significant" classification of the acquisition in the upcoming 10-K filing for the year ended December 31, 2013.
  • Review the specific terms of the Purchase and Sale Agreement (filed as Exhibit 10.1 to the February 7, 2014 8-K) for any contingent liabilities or earn-out provisions.
  • Assess the development timeline and capital requirements for the 660 net acres of undeveloped land.