Ring Energy (REI) Water Tower Research Fireside Chat Series summary

Operational performance and asset integration

• Production from acquired Lime Rock assets exceeded forecasts by nearly 15% in the first month and has continued to meet or surpass expectations since.

• Lime Rock assets are fully integrated, with ongoing initiatives to further reduce costs and improve efficiency.

• Lease operating expenses dropped to $10.73 per BOE, below guidance, due to cost-saving measures like optimized chemical programs and reduced failure rates.

• Initiatives such as rebidding goods/services and reducing operators have been implemented across operating areas.

• Enhanced chemical treatments have extended well run times, reducing repair costs and supporting higher production rates.

Production mix, capital allocation, and efficiency

• Oil comprised 64% of Q3 production, with future mix expected to remain consistent, driven by capital allocation to oil-weighted, capital-efficient projects.

• Gas gathering system downtime affected production mix, but guidance accounts for infrastructure performance.

• 2026 capital will focus on the most capital-efficient projects, with a continued emphasis on oil-weighted opportunities.

• Fourth quarter drilling is expected to deliver more production per dollar spent, impacting Q1 2026 output.

• Horizontal drilling with longer laterals and testing new zones are planned to improve capital efficiency and expand inventory.

Financial strategy and debt management

• Adjusted Free Cash Flow for Q3 was $13.9 million, with $32 million in long-term debt repaid since the Lime Rock acquisition.

• CapEx for 2025 was reduced from an initial $154 million to a midpoint of $97 million, reflecting flexibility amid softer oil prices.

• Fourth quarter 2025 targets include an $18 million reduction in liabilities, including a $10 million deferred payment.

• Lower natural decline rates reduce maintenance capital needs, supporting debt reduction and liquidity.

• At $60 WTI, priority is debt reduction over growth; higher prices would accelerate debt repayment.