Ring Energy, Inc.

Good morning and welcome to Ring Energy's fourth quarter and full year 2022 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. Please go ahead.

Thank you, Operator, and good morning, everyone. We appreciate your interest in Ring Energy. We will begin our call with comments from Paul McKinney, our Chairman of the Board 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 Diaz, Executive VP of Engineering and Corporate Strategy, Marinos Baghdadi, Executive VP 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 are welcome to re-enter the queue later with additional questions. I would also note that we have posted a Q4 and full year 2022 earnings corporate 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 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 our filings with the SEC. These documents can be found in the Investors section of our website at ringenergy.com. Should one or more of these risk factors 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 yesterday's earnings release. Finally, as a reminder, this conference is being recorded. I would now like to turn the call over to Paul McKinney, our chairman and CEO. Thanks, Al.

Welcome, everyone, and thank you for your interest in Ring Energy and for joining us today for our fourth quarter and year-end 2022 earnings call. We are pleased with our record operational and financial performance during the fourth quarter. Contributing to our success was a full three months of production from our stronghold acquisition, the continued implementation of our targeted 2022 capital spending program and our ongoing initiatives to drive further efficiencies in the business. During the fourth quarter, we grew sales volumes by 34% over the third quarter to a record of 17,856 barrels of oil equivalent per day. Although this was slightly below our guidance, it was primarily due to downtime associated with the impact of the winter storm conditions gas purchaser system constraints limiting our gas sales in the CBP and Northwest Shelf areas, and adjustments for year-end reversionary interest and after-payout conditions. We brought online seven new horizontal wells, including five in the Northwest Shelf and two in the legacy Central Basin Platform area, an area we now call the CBP North. We also brought on five new vertical wells in the Stronghold acreage, an area which we call CBP South. We also performed nine re-completions in CBP South. We produced a record adjusted EBITDA of $56.3 million during the fourth quarter that was 135% higher than the same quarter for the previous year. We spent $42.6 million on capital projects, which was at the lower end of our guidance of $42 million to $46 million. The result was $5.5 million of free cash flow, which was our 13th consecutive quarter of free cash flow generation. Additionally, we reduced our debt position by $20 million during the quarter and $37 million since closing the transaction on August 31, 2022. We also reaffirmed the company's borrowing base of $600 million under our revolving credit facility in December. The fourth quarter marked an end of a transformational year for the company. We began 2022 with a solid base of core assets in the Northwest Shelf and Central Basin Platform and a well-defined plan to further develop our high rate of return inventory through a continuous one-rig drilling program. Our pursuit of accretive acquisitions was rewarded in the third quarter by closing the stronghold acquisition, and we ended the year with a successful integration of those assets into our operations, accounting, and land record systems. 2022 was marked by several highlights, including record sales volumes of 12,364 barrels of oil equivalent per day that were 45% higher than 2021. Record net income of $138.6 million, or $0.98 per diluted share. Growth in adjusted net income of 251% to a record $107.5 million, or $0.89 per share. a 134% increase in adjusted EBITDA from the previous year to a record of $195.2 million, and a strong free cash flow of $34.8 million and record cash flow from operations of $172.9 million, a 70% and 149% year-over-year increase, respectively. We ended the year with $415 million of debt on the balance sheet and $188 million in liquidity, which is three times the liquidity we had at the end of 2021. We lowered our leverage ratio by more than 50% from the previous year to 1.6 times. During the full year of 2022, we drilled and completed 27 horizontal wells, including 18 in the northwest shelf and nine in the central basin platform north, and five vertical wells in the central basin platform south. We also performed 12 re-completions in CBP South. Our success in 2022 was also reflected in our year-end SEC total approved reserves, which grew 78% to a record 138.1 million barrels of oil equivalent, over the prior year. Contributing to the increase was 62.9 million barrels of oil equivalent from acquisitions, 1.2 million barrels of oil equivalent from positive well performance revisions, and 0.8 million barrels of oil equivalent from extensions and discoveries. Partially offsetting the overall increase was approximately 4.5 million barrels of oil equivalent of production. The result was an all-in replacement ratio of 13.4 times our production for the year. The PV10 of our total approved reserves using SEC prices grew 108% to $2.8 billion. Turning to our outlook, We intend to spend between $135 and $170 million during 2023. That includes a capital-efficient combination of drilling horizontal wells on our Legacy acreage and vertical wells on our CBP South acreage. This amount also includes planned spending for recompletions, capital workovers, infrastructure upgrades, leasing costs, and ESG-related projects. In January, we began our 2023 capital spending program with the drilling and completion of three horizontal wells in the Northwest Shelf, all of which have been placed on production. A fourth horizontal well in the Northwest Shelf has been drilled and is expected to be completed and placed on production by the end of this month. Additionally, we picked up a rig in CBP South area to drill three vertical wells and anticipate having all three wells online by the end of the month as well. Our 2023 budget assumes WTI oil prices are between $70 and $90 per barrel of oil. And Henry Hub prices are between $2 and $4 per MCF. As in the past, we have designed our spending program with flexibility to respond to changes in commodity prices and other market conditions. We expect full year 2023 sales volumes to be between 17,800 and 18,800 barrels of oil equivalent per day. When considering the midpoint of our full year 2023 sales volume guidance, we anticipate a 48% increase over full year 2022 and a 2.5% increase over fourth quarter 2022. For the first quarter of 2023, We expect sales volumes to come in between 17,800 and 18,300 barrels of oil equivalent per day. So with that, I will turn this call over to Travis to discuss our financial results and guidance in more detail. Travis.