Ring Energy, Inc. (NYSE: REI)

Sector: Energy Industry: Oil & Gas E&P CIK: 0001384195
Market Cap 292.11 Mn
P/B 0.34
P/E -18.00
P/S 0.90
ROIC (Qtr) 0.88
Div Yield % 0.00
Rev 1y % (Qtr) -11.93
Total Debt (Qtr) 431.85 Mn
Debt/Equity (Qtr) 0.51
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About

Ring Energy, Inc., a growth-oriented independent oil and natural gas exploration and production company, is based in The Woodlands, Texas, and listed on the NASDAQ stock exchange under the ticker symbol REI. The company's main business activities encompass the development, production, acquisition, and exploration of oil and natural gas resources in the Permian Basin of Texas. As of December 31, 2023, Ring Energy's leasehold acreage positions totaled 96,127 gross (80,535 net) acres, and it held interests in 1,043 gross (864 net) producing wells. The...

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Investment thesis

Bull case

  • Operating cash flow of 153.44M provides strong 23.34x coverage of stock compensation 6.58M, indicating sustainable incentive practices.
  • Strong tangible asset base of 1.43B provides 3.32x coverage of total debt 431.85M, indicating robust asset backing and low credit risk.
  • Strong operating cash flow of 153.44M provides 4.80x coverage of SG&A expenses 31.93M, showing efficient operational cost management.
  • Operating cash flow of 153.44M provides solid 1.51x coverage of current liabilities 101.62M, showing strong operational health.
  • Operating cash flow of 153.44M fully covers other non-current liabilities 55.90M by 2.74x, showing strong long-term stability.

Bear case

  • Operating cash flow of 153.44M barely covers its investment activities of (181.92M), with a coverage ratio of -0.84, indicating heavy reliance on external financing for growth which may not be sustainable in a tighter credit environment.
  • With cash reserves of 286907 against inventory of 4.99M, the 0.06 cash-to-inventory ratio suggests potential liquidity risks if inventory turnover slows, particularly concerning given current supply chain volatilities.
  • Cash reserves of 286907 provide limited coverage of acquisition spending of (72.57M), which is -0x, suggesting aggressive expansion might strain liquidity if market conditions deteriorate.
  • Short-term investments of 12.85M significantly exceed cash reserves of 286907, which is 44.80x, indicating potentially excessive yield-seeking behavior at the expense of liquidity.
  • High receivables of 35.42M relative to inventory of 4.99M (7.11 ratio) suggests aggressive credit terms or collection difficulties, potentially masking revenue quality issues.

Segments Breakdown of Revenue (2024)

Segments Breakdown of Revenue (2024)

Peer comparison

Companies in the Oil & Gas E&P
S.No. Ticker Company Market Cap P/E P/S Total Debt (Qtr)
1 COP Conocophillips 136.62 Bn 17.10 2.22 23.44 Bn
2 CNQ Canadian Natural Resources Ltd 85.21 Bn 17.67 3.04 12.51 Bn
3 EOG Eog Resources Inc 66.33 Bn -60.48 8.67 8.13 Bn
4 FANG Diamondback Energy, Inc. 49.64 Bn -2,818.83 314.47 16.24 Bn
5 OXY Occidental Petroleum Corp /De/ 37.18 Bn 15.36 2.56 22.88 Bn
6 WDS Woodside Energy Group Ltd 34.64 Bn 11.73 2.51 -
7 TPL Texas Pacific Land Corp 29.74 Bn 126.16 78.66 0.02 Bn
8 DVN Devon Energy Corp/De 18.80 Bn 3.24 1.91 8.55 Bn

Industry comparisons

Current Valuation Value Ind Avg Percentile
EV to Assets EV to Assets 0.52 1.02
EV to Cash from Ops. EV/CFO 4.85 18.21
EV to Debt EV to Debt 1.72 54.57
EV to EBIT EV/EBIT 31.90 29.98
EV to EBITDA EV/EBITDA 6.62 19.64
EV to Free Cash Flow [EV/FCF] EV/FCF 16.99 39.33
EV to Market Cap EV to Market Cap 2.55 1.57
EV to Revenue EV/Rev 2.30 11.47
Price to Book Value [P/B] P/B 0.34 2.97
Price to Earnings [P/E] P/E -18.00 -25.98
Dividend Metrics Value Ind Avg Percentile
Dividend Coverage Ratio Dividend Coverage Ratio 0.00 26.80
Dividend Payout Ratio % Div Payout % (Qtr) 0.00 31.86
Dividend per Basic Share Div per Share (Qtr) 0.00 0.78
FCF Dividend Payout Ratio % FCF Div Payout % (Qtr) 0.00 1.05
Interest Coverage Int. cover (Qtr) 0.56 -4.97
Growth Metrics Value Ind Avg Percentile
Capex Growth (1y) % Capex 1y % (Qtr) 28.12 -533.65
Cash and Equivalents Growth (1y) % Cash & Equiv 1y % (Qtr) 0.00 52.06
Dividend Growth (1y) % Dividend Growth (1y) % 0.00 -5.45
EBIAT Growth (1y) % EBIAT 1y % (Qtr) -85.93 6.14
EBITDA Growth (1y) % EBITDA 1y % (Qtr) -54.84 105.89
EBIT Growth (1y) % EBIT 1y % (Qtr) -87.31 75.94
EBT Growth (1y) % EBT 1y % (Qtr) -112.99 17.44
EPS Growth (1y) % EPS 1y % (Qtr) -112.28 3.07
FCF Growth (1y) % FCF 1y % (Qtr) -13.00 -43.36
Gross Profit Growth (1y) % Gross Profit 1y % (Qtr) -21.86 149.32
Liquidity Ratios Value Ind Avg Percentile
Asset Utilization Ratio Asset Util Ratio (Qtr) 0.23 0.33
Cash Payout Ratio Cash Payout (Qtr) 0.00 0.07
Cash Ratio Cash Ratio (Qtr) 0.00 1.32
Current Ratio Curr Ratio (Qtr) 0.55 2.37
Debt to Equity Ratio Debt/Equity (Qtr) 0.51 0.34
Interest Cover Ratio Int Coverage (Qtr) 0.56 -4.97
Times Interest Earned Times Interest Earned (Qtr) 0.56 -4.97
Profitability Value Ind Avg Percentile
EBITDA Margin % EBITDA Margin % (Qtr) 37.50 16.19
EBIT Margin % EBIT Margin % (Qtr) 7.21 -16.83
EBT Margin % EBT Margin % (Qtr) -5.58 -24.06
Gross Margin % Gross Margin % (Qtr) 67.80 58.92
Net Profit Margin % Net Margin % (Qtr) -5.00 -28.75