Ring Energy (REI) Water Tower Research Virtual Insights Conference summary

Strategic priorities and operational focus

• Emphasis on disciplined management, high-margin assets with low operating costs, and a robust inventory of drilling opportunities to ensure resilience and sustainable growth.

• Organic growth is prioritized, supported by a strong capital position and a disciplined approach to capital allocation.

• Infrastructure investments, such as frack ponds and saltwater handling, have been accelerated to support expanded horizontal drilling.

• Focus on reducing debt and leverage ratio to increase financial flexibility and reduce hedging requirements.

• Testing and co-development of stacked pay zones are expanding the inventory of economic drilling locations.

Growth strategy and capital efficiency

• Acquisitions have provided a foundation for both vertical and horizontal drilling, with recent technology enabling more efficient co-development.

• Horizontal drilling and co-development of multiple zones on single pads have increased capital efficiency and production per dollar spent.

• Capital efficiency is measured by barrels of production and reserves added per dollar spent, with ongoing improvements in drilling and completion costs.

• Lower lease operating expenses (LOE) and higher production are expected to drive positive cash flow in 2027.

• Organic leasing and development have enabled consistent reserve replacement and production growth without reliance on acquisitions.

Financial outlook and risk management

• 2027 capital budget is set at $135–$165 million, targeting over 10% production growth year-over-year.

• Base case for 2027 uses $75 oil, with stress tests down to $60; free cash flow is expected even at lower prices.

• Leverage ratio is targeted at 1x by end of 2027, with a meaningful reduction in required hedging as leverage decreases.

• 60% of forecasted 2027 production will be exposed to market prices, with hedging focused on meeting lender requirements but allowing for upside participation.

• Historical hedge losses have driven a shift toward opportunistic rather than defensive hedging as financial strength improves.