Ring Energy, Inc.

Good morning and welcome to the Ring Energy Year-End 2021 Earnings Conference Call. All participants will be in 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 Al Petrie, Investor Relations for Ring Energy. Please go ahead.

Thank you, Andrea, and good morning, everyone. We appreciate your interest in Ring Energy. We will begin our call with comments from Paul McKinney, our Chairman and CEO, who will provide an overview of key matters for the fourth quarter and full year. We will then turn the call over to Travis Thomas, Ring's Chief Financial Officer, who will review our financial results. Paul will then return to discuss our future plans and outlook before we open the call up for questions. Also joining us on the call today and available for the Q&A session are Alex Dias, Executive VP of Engineering and Corporate Strategy, Marinas Baghdadi, Executive VP of Operations, and Steve Brooks, Executive VP of Land, Legal, Human Resources, and Marketing. During the Q&A session, we ask you to limit your questions to one and a follow-up. You're welcome to rejoin the queue later with additional questions. I would also note that we have posted a Q4 and full year 2021 investor presentation to our website. During the course of this conference call, the company will be making forward-looking statements within the meaning of federal securities laws. 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, and the company can give no assurance that such forward-looking statements will prove to be correct. Ring Energy disclaims any intentions or obligations 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 our filings with the SEC. These documents can be found in the Investors section of our website. Should one or more of these risks materialize or should underlying assumptions prove incorrect, actual results may vary materially. This conference call also includes references to certain non-GAAP financial measures. Reconciliations of these non-GAAP financial measures to the most directly comparable measure under GAAP are contained in our earnings announcement released yesterday. Finally, as a reminder, this conference call is being recorded. I would now like to turn the call over to Paul McKinney, our Chairman and CEO.

Paul McKinney Thank you, Al. Welcome, everybody, and thank you for your interest in Ring Energy and for joining us today for our fourth quarter and year-end 2021 earnings call. As you may know, we finished 2021 with strong fourth quarter results. We generated free cash flow of $9.3 million during the fourth quarter and $20.5 million of free cash flow during the full year of 2021, marking our ninth consecutive quarter of producing positive cash flow. We used the cash flow to help pay down $23 million of debt in 2021, including $5 million during the fourth quarter, which helped us reduce our interest expense by almost 18% when compared to the prior year. During the fourth quarter, we enjoyed higher product prices while continuing to make progress driving operational efficiencies that resulted in adjusted EBITDA and adjusted net income growth over the third quarter of 2021 of 21% and 46% respectively. For the full year 2021, we posted adjusted EBITDA of $83.3 million and adjusted net income was $30.6 million. which was 48% higher than the full year 2020. We ended 2021 with $61.6 million of liquidity, a 10% increase from the end of the third quarter and 52% higher year over year. If you recall, we have a $1 billion revolving credit facility with a borrowing base of $350 million, which was reaffirmed in December. Availability under our credit facility at December 31, 2021, was $59.2 million. With respect to our development initiatives, we continue to benefit from our successful 2021 drilling program that targeted high-rate return opportunities in our northwest shelf and central basin platform areas. The result was fourth quarter 2021 sequential sales volume growth of 11%, where we averaged 9,153 barrels of oil equivalent per day, of which 85% was oil. We concluded our 2021 drilling program with a Phase 4 package of two wells that were drilled and completed on time and within budget and placed on production in the fourth quarter. Both wells have performed at or above expectations to date, which is consistent with the overall results of our 2021 program. We drilled 11 wells last year, including 8 wells in the Northwest Shelf and 3 wells in the Central Basin Platform. And we completed 13 wells, including 10 wells in the Northwest Shelf and 3 wells in the Central Basin Platform. My favorite part of what we accomplished last year in our drilling and completion program was our success in the Central Basin Platform. All three CBP wells are performing better than the average wells drilled there in the past. with two of our wells on course to exceed the ultimate recovery of the best wells drilled in the offsetting area. We accomplished this by focusing on the geology, selecting the best landing zones, and improvements in our completion methods. We not only improved the performance of our wells, we unlocked incremental value from the legacy portion of our asset base. In 2021, we also converted 25 wells from downhole electrical submersible pumps to rod pumps, something we call CTRs for short. In 2021, we converted 19 wells in the Northwest Shelf and six wells in the Central Basin platform. The long-term benefit of our targeted CTR program comes in two forms. First, we're able to significantly reduce our operating costs through lower electricity usage and considerably lower repair costs. The resulting lower operating costs drive the second benefit, which is the wells generally experience longer economic lives leading to higher ultimate recovery of the oil and gas reserves. With respect to our reserves, our 2021 capital development program helped us grow our year-end 2021 SEC approved reserves by 2% to 77.8 million barrels of oil equivalent, more than replacing our production for the full year. Turning to our 2022 outlook, On January 1, nearly 60% of our low-priced hedges rolled off, which allows us to capitalize on improved commodity prices and generate higher revenue and operating cash flow, assuming, of course, that commodity prices remain strong. In response, we are increasing our capital spending to organically grow production and adjusted EBITDA. We intend to continue paying down debt, and we plan to do so all within operating cash flow. The success of our 2021 program has given us confidence to increase our 2022 capital investment program, which is designed to enhance our scale and improve our financial metrics while dramatically reducing our leverage ratio. We are forecasting a meaningful reduction of our leverage ratio from approximately three and a half times at December 31st, 2021 to less than two times at the end of 2022. As we have said earlier, we initiated our one-rig continuous drilling program in late January, which is again focused on our highest rate of return inventory in both the Northwest Shelf and Central Basin Platform areas. To date, four wells have been drilled in the Central Basin Platform, including two wells that were placed on production earlier this month and two wells that are expected to be online in April. By running a continuous drilling program, we believe we can more than offset the natural decline rates of our wells and grow our quarterly production levels starting in the second quarter. We anticipate full year production to increase almost 10% based on the midpoint of our guidance. Of course, we will continue to retain the ability to adjust our drilling and other capital spending programs to reflect material changes in our commodity prices. We currently plan to drill 25 to 33 wells in 2022 and complete 25 to 30 wells across our Northwest Shelf and Central Basin Platform acreage. The midpoint of our total capital spending guidance includes approximately 82% for drilling, completion, and equipping activities. Completing our drilling program, or I'm sorry, complementing our drilling program, we are allocating approximately 12% for continued execution of our successful CTR, recompletion, and capital workover programs. with the remaining 6% intended for land-related costs and other miscellaneous spending. Our guidance reflects our current view of the inflationary impact on our operating and development costs. Now, before I turn this call over to Travis, I would like to share one more point with you concerning our ESG initiatives. Promoting environmental stewardship, supporting our employees and communities where we work, and ensuring sound corporate governance are cornerstones of our culture. Last year, we made substantial progress on our ESG journey by issuing our inaugural ESG report, revising all of our charters, and updating our corporate guidelines to be consistent with modern governance practices. We believe that ESG is not just the responsibility of our board and our executive leadership, but also extends to our employees. Our inaugural report provides a great foundation upon which to build And we will continue to demonstrate the importance of ESG to the long-term sustainability of this company. So with that, I will turn it over to Travis to discuss our financial results in more detail. Travis?