Ring Energy, Inc.

Good day and welcome to the Ring Energy second quarter 2021 earnings conference call. All participants will be in a listen only mode. Should you need assistance, please signal a conference specialist by pressing star then zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on a touch tone phone. 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 Al Petrie, Investor Relations. Please go ahead.

Thank you, Matt, and good morning, everyone. We appreciate you taking the time to join us today and for your interest in Ring Energy. We'll begin our call with comments from Paul McKinney, Chairman of the Board and CEO, who will provide an overview of key matters for the second quarter. We will then turn the call over to Travis Thomas, our Chief Financial Officer, who will review our detailed financial results. Paul will then discuss our future plans and outlook. Also joining us on the call today and available for the Q&A session are Alex Diaz, Executive Vice President of Engineering and Corporate Strategy, Marinos Baghdadi, Executive Vice President of Operations, and Steve Brooks, Executive VP of Land, Legal, Human Resources, and Marketing. During the Q&A session, we asked you to limit your questions to one and a follow-up. You're welcome to re-enter the queue later 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 the reports filed with the SEC. As a reminder, this conference is being recorded. I would now like to turn the call over to Paul McKinney, our Chairman and CEO. Paul McKinney Thank you, Al.

I want to welcome everyone to our second quarter 2021 earnings call. We are pleased with the overall results for the second quarter. This makes our seventh consecutive quarter of generating free cash flow that we partially utilized to further pay down debt. Looking at our results in more detail, during the second quarter of 2021, we sold 792,551 barrels of oil equivalent, or 8,709 barrels of oil equivalent per day, which was an 11% increase from this year's first quarter sales of 716,422 barrels of oil equivalent, or 7,960 VOE per day. Contributing to the higher production was the success of our Northwest Shelf Phase I and Phase II drilling programs. As a result, and as we discussed on our last earnings call, our four-well Phase I program came in on schedule and within budget and collective production results continue to meet or exceed our original expectations. During the second quarter, collectively, the four wells produce 101,800 gross barrels of oil equivalent, or approximately 280 BOE per day per well. Also during the second quarter, we drilled, completed, and placed on production all three Phase II wells. Similar to Phase I, the Phase II wells came in on schedule and within budget, and with all three wells brought online by June 3rd. The collective production results from the phase two wells have also met or exceeded our original estimates, including total production from the three wells of 22,700 gross barrels of oil equivalent or approximately 270 barrels of oil equivalent per day per well for the last 28 days of June. If you recall, on our first quarter conference call, We expected a significant increase in second quarter sales volumes given the ongoing success of our development programs and the anticipated restoration of natural gas sales disrupted by the severe winter storm in February. While second quarter sales volumes did increase 11 percent from the first quarter, They were lower than anticipated primarily due to continuing downtime from these third-party processing facilities in the central basin platform that negatively affected natural gas sales. Additionally, we incurred pipeline capacity constraints during the quarter in the northwest shelf that further impacted our natural gas sales. In late May and early June, we also experienced lightning strike-related damage to several of our facilities that impacted oil sales for the period. with repairs completed and the wells brought back online by mid-July. As you know, natural gas is a minor component of our total sales revenue. Although these reduced natural gas sales impacted our total sales volumes on a VOE basis, they had a relatively minor impact on EBITDA for the quarter. With respect to sales revenue, we benefited from higher crude pricing during the period which when combined with the 11% increase in crude oil sales contributed to the overall 21% increase in revenues over the first quarter. The combined impact from these items as well as our ongoing cost reduction initiatives resulted in second quarter 2021 adjusted EBITDA of $20.6 million and $5.6 million of free cash flow. We utilized a large portion of our free cash flow during the quarter to pay down $5 million of bank debt and ended the period with approximately $51 million of liquidity, a 13 percent increase from the end of the first quarter. When considering the first half of 2021, we generated $39.6 million in adjusted EBITDA, $8.6 million of free cash flow, and reduced the borrowings on a revolver by $12.5 million. in response to the higher crude oil pricing environment. Yesterday, we announced an increase to our original drilling plans. We picked up two rigs last week and initiated the drilling of the first two wells of a four-well phase three drilling program. We have 100 percent working interest in all of these wells. Our current plan is to follow up the phase three wells with a one-rig phase four program to drill an additional two or more wells beginning early in the fourth quarter. The wells in Northwest Shelf are planned to be one mile laterals, while the ones in the Central Basin Platform are planned to be one and a half mile laterals. We anticipate the payback on invested capital for these wells to be one year or less, given the current price environment. Although the anticipated production will not have a meaningful impact on 2021 production volumes, keep in mind that if the current price environment continues, these new volumes will place us in a very strong position as we enter 2022. With that, I will turn the call over to Travis Thomas to discuss our financials in more detail. I'll then come back and make a few closing remarks. Travis?