In an Aug. 22 research note, analyst John White reported changes to ROTH Capital Partners' model on Ring Energy Inc. (REI:NYSE).
ROTH lowered its target price on the company to $8 per share from $12 to reflect its revised oil and gas price deck for West Texas Intermediate (WTI) and Henry Hub from Q3/19 to beyond 2021. Shares are currently trading at around $1.37.
For 2020, the investment banking firm lowered its WTI crude oil price forecast to $52.25 a barrel (52.25/bbl) from $54.75/bbl and reduced its Henry Hub natural gas price projection to $2.40 per million British thermal units ($2.49/MMBtu) from $2.49/MMBtu.
However, despite the projected lower oil and gas prices, ROTH modestly increased its Q3/19 earnings per share/cash flow per share/EBITDA forecasts on Ring Energy to $0.15/$0.38/$30.5 million due to slightly higher estimated Q3/19 production.
According to Ring Energy's mid-Q3/19 operations update, it drilled six new, one-mile, horizontal San Andres wells on its Northwest Shelf (NWS) property. Of those, two were awaiting completion. The other four were drilled, completed and being tested. "Initial test results are indicating rates ranging between 400 and 500 barrels of oil equivalent per day (400 and 500 bboe/day), which we view as positive," noted White.
Between its Northwest Shelf and Central Basin Platform (CBP), Ring Energy drilled 11 unreported wells. Four, two CBP and two NWS, were awaiting completion. Of those, one CBP and one NWS, were completed and showing about 360 boe/d and 320 boe/d, respectively. The other two, one CBP and one NWS, are newly completed and being tested.
The remaining seven out of the total 11, five CBP and two NWS, were drilled, completed and being tested. Those were showing 265–528 boe/d with an average of about 400 boe/d. "We view this average figure as positive," White commented.
ROTH has a Buy rating on Ring Energy.[NLINSERT]
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Disclosures from ROTH Capital Partners, Ring Energy Inc., Company Note, August 22, 2019
Regulation Analyst Certification ("Reg AC"): The research analyst primarily responsible for the content of this report certifies the following under Reg AC: I hereby certify that all views expressed in this report accurately reflect my personal views about the subject company or companies and its or their securities. I also certify that no part of my compensation was, is or will be, directly or indirectly, related to the specific recommendations or views expressed in this report.
ROTH makes a market in shares of Ring Energy, Inc. and as such, buys and sells from customers on a principal basis.
Shares of Ring Energy, Inc. may be subject to the Securities and Exchange Commission's Penny Stock Rules, which may set forth sales practice requirements for certain low-priced securities.
ROTH Capital Partners, LLC expects to receive or intends to seek compensation for investment banking or other business relationships with the covered companies mentioned in this report in the next three months.