Ring Energy, Inc.

Good morning and welcome to the Ring Energy fourth quarter 2020 earnings conference call. All participants will be in a listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on your telephone keypad. To withdraw your question, please press star then two. Please note, this event is being recorded. I would now like to turn the conference over to David Fowler with Investor Relations. Please go ahead.

Thank you, Chad. And good morning, everyone. Thank you for taking the time this morning to join us and for your interest in Ring Energy. We will begin our call with comments from Paul McKinney, our Chairman of the Board and CEO of who will provide an overview of key matters during the fourth quarter and full year, including a review of our year-end reserve report. We will then turn the call over to Randy Broderick, our CFO, who will review our financial results. Paul will then return with a review of strategy and plans for 2021. Also joining us this morning on the call is Alex Dives, our Executive Vice President of Engineering and Corporate Strategy, and Marinos Baghdadi, our Executive Vice President of Operations, and Steve Brooks, our Executive Vice President of Land, Legal, Human Resources, and Marketing, all of whom will be available for our Q&A session. During our question and answer session, we'll ask you to limit your questions to one and a follow-up. You can always re-enter the queue with additional questions. During the course of this conference call, the company will be making forward-looking statements. Investors are cautioned that forward-looking statements are not guarantees of future performance, and those actual results or developments may differ materially from those projected in the forward-looking statements. Ring Energy disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise. Accordingly, you should not place undue reliance on forward-looking statements. These and other risks are described in yesterday's press release and in the reports filed with the Securities and Exchange Commission. As a reminder, this conference call is being recorded. I would like now to turn the call over to Paul McKinney, our Chairman and CEO.

Thank you, David, and welcome everyone to our year-end 2020 call. Let's start with a review of the key highlights of our fourth quarter. We exceeded the high end of our guidance with sales volumes of 9,307 barrels of oil equivalent per day, of which 86% was oil. Contributing to our production outperformance was a continuation of our highly successful work over and reactivation efforts. We also performed eight CTRs in the fourth quarter, including four in the Northwest Shelf and four in the Central Basin Platform. our ongoing CTR program converts wells from electrical submersible pumps to rod pumps, which reduces future overall operating costs and lessens costly workovers. During the fourth quarter, we generated $25 million of adjusted EBITDA that contributed $13 million of free cash flow during the period, marking our fifth consecutive quarter of free cash flow. We utilized our free cash flow and the cash on hand to pay down $47 million of bank debt and ended the period with $41 million of liquidity, increasing our liquidity by more than 25% than what we had at the end of the third quarter. Finally, with the funds from equity raise and supported by rising oil price environment, in early December, we initiated a targeted Northwest Shelf drilling program that focuses on our highest rate of return inventory. All four of the wells drilled in our winter drilling campaign have been completed and are on production As we noted in our release, the first well we drilled, the Badger 709B6XH, is currently producing over 400 barrels of oil a day and is still cleaning up. We are pleased to see initial production results from these four wells have exceeded our expectations. Now let's take a look at the full year of 2020. Our average sales were 8,790 barrels of oil equivalent per day, of which 87% was oil. We performed 29 CTRs, including 17 in the Northwest Shelf and 12 in the Central Basin Platform. Our continuing targeted CTR workover and reactivation programs combined with our ongoing cost optimization initiatives contributed to a lifting cost of $10.52 per BOE, an 8% decrease year over year. We generated $86 million of adjusted EBITDA that contributed to $40 million of free cash flow, which we used to help pay down $75 million of bank debt during 2020. Turning to our year-end 2020 reserves, and based on SEC reserve prices, yeah, SEC average prices of $36.04 per BOE, or barrels of oil, and $1.99 per MMBP. of natural gas, we reported year-end 2020 approved reserves of 76.5 million barrels of oil equivalent, which was down modestly from our 81.1 million barrels of oil equivalent we had at the year-end 2019. For comparison, SEC average prices in 2019 were $52.19 per barrel of crude oil and $2.58 per mm BTU of natural gas. During 2020, we recorded net upward revisions of 1.3 million barrels of oil equivalent, primarily related to additions, improved well performance, and technical revisions that were offset by reductions of 2.7 million barrels of oil equivalent due to lower commodity prices and 3.2 million barrels of oil equivalent of production. Our SEC approved reserves were comprised of 87% crude oil and 13% natural gas, with 57.5% of total proved reserves classified as proved developed, and the remaining 42.5% as proved undeveloped. Our reserve life ratio based on year-end 2020 SEC proved reserves and 2020 production was 23.8 years. The PV10 of our year-end 2020 SEC proved reserves taken from our standard measure of future cash flows was $556 million, which was down 40% from the $923 million at the end of 2019, primarily due to lower prices. With these operational financial results, we are carrying forward a strong momentum into 2021, where we believe we will have even a better year. With that, I will now turn the call over to Randy to discuss our financials in more detail.