Ring Energy, Inc.

Good morning, and welcome to the Ring Energy third quarter 2023 earnings conference call. At this time, all participants are in a listen-only mode. And should you need any assistance during the call, please press star then zero on your telephone keypad. A question and answer session will follow the formal presentation. To join the question queue, you may press star then one on your touchtone phone. To remove yourself from the queue, you may press star then two. I will now turn the call over to Al Petrie, investor relations for Ring Energy.

Thank you, operator, and good morning, everyone. We appreciate your interest in Ring Energy. We'll 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 third quarter and our outlook. We'll then turn the call over to Travis Thomas, Ring's executive VP and chief financial officer, who will review our financial results. Paul then will return with some closing comments 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, 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're welcome to re-enter the queue later with additional questions. I would also note that we have posted a third quarter 2023 earnings corporate presentation on 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 of developments may differ materially from those projected in the forward-looking statements. Finally, the company can give no assurance that such forward-looking statements will prove 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 administrative section of our website, www.ringenergy.com. 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 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, and welcome everyone joining us today, and thank you for your interest in Ring Energy. It is amazing how conditions can change from one quarter to the next. Realized oil prices improved considerably in the third quarter, setting us up for record-tying financial results despite several unanticipated downtime events affecting our sales. Overall, we are reporting another great quarter and are encouraged by the positive mood and outlook we see in the industry today. As we discussed on our second quarter earnings call, our efforts for the third quarter of 2023 were squarely focused on successfully closing the founders acquisition and making significant progress on the integration of their operations into our business. In addition, we continue the targeted execution of our 2023 development program. Next, we remain diligent in our efforts to drive cost efficiencies throughout our business. And finally, we continue to generate solid free cash flow that was used to further pay down our debt balance exclusive of funding the founder's acquisition. Addressing the details of the quarter, first, we completed the final due diligence for the founder's acquisition and closed on the acquisition on the agreed to timeline. In addition, our plans remain on track integrating the founder's assets into our existing operations. We remain excited about the opportunities afforded by the acquisition and look forward to beginning our development efforts on the acreage in the early part of next year. As a reminder, These assets are similar to the CBP assets we acquired last year, having stacked pay zones of high-quality rock with proven performance. As we have successfully done with our other assets, we intend to leverage our extensive expertise applying the newest conventional and unconventional technologies to optimally develop the inventory of undeveloped drilling locations afforded by the transaction. During the third quarter, we continued our successful 2023 development program with the drilling and completion of two one-mile horizontal wells in the northwest shelf, one with a working interest of 100% and the other with a working interest of 75%, and three one-and-a-half-mile horizontal wells in the central basin platform, each with a working interest of 100%. Additionally, in our Crane County acreage within the CBP, we drilled and completed three vertical wells, all with a working interest of 100%. Lastly, we drilled and began the completion process on three one-mile horizontal wells in the northwest shelf, each with a working interest of 90%. These three wells were completed and brought online in October, so we will benefit from over two months of production from these wells in the fourth quarter, while the substantial majority of the drilling and completion capital was incurred during the third quarter. Our third quarter 2023 was highlighted by continued strong cash flow generation, including $58.6 million of adjusted EBITDA that was 10% higher than the second quarter and also tied the record we posted in this year's first quarter. Contributing to the sequential increase in adjusted EBITDA was higher realized pricing and sales volumes for all products. During the third quarter, we sold 17,509 barrels of oil equivalent per day, which was an increase from the second quarter of 2023, but felt short of our expectations. While our sales benefited from the August 15th closing of the founders acquisition as planned, several unanticipated and temporary downtime events at certain third-party natural gas processing facilities affected our natural gas and NGL sales. Additionally, we incurred three weeks of downtime due to a tank battery fire that shut in oil, natural gas, and associated NGL sales at that battery. I'm happy to report that the production is back up to expected levels as evidenced by our third quarter exit rate, which was in excess of 19,000 barrels of oil equivalent per day. This places us in a solid position to achieve our fourth quarter sales volumes guidance of 18,900 to 19,500 barrels of oil equivalent per day that we will discuss in more detail later. We generated 6.1 million of adjusted free cash flow during the quarter, which marked our 16th consecutive quarter, or four straight years, of generating positive adjusted free cash flow. Six and a half million decrease from the second quarter was driven by increased capital spending of 10.8 million and $800,000 of higher cash interest expense that was materially offset by adjusted EBITDA of 5.1 million. On an accrual basis, we spent 42.4 million on capital projects during the third quarter, which was at the high end of our guidance range of 37 million to 42 million. Driving our higher spending was an increased well level activity compared to the guidance we provided in early August. During the third quarter, we drilled eight horizontal wells and three vertical wells and completed and placed on line eight total wells. As a reminder, our guidance was to drill five to seven horizontal wells and one to two vertical wells and complete and place on line five to six total wells during the period. We stepped up our spending program for these projects to help ensure we deliver on our production guidance for the fourth quarter and set us up for a good start for the new year. We were pleased to complete the sale of our non-core operated New Mexico assets to a private buyer on September 27th for net proceeds of $3.8 million. Consistent with the sale of our non-core Delaware Basin assets that closed in the second quarter, the New Mexico asset sale emphasizes our focus on building and developing our core operating position in the Northwest Shelf and the Central Basin platform in Texas that continues to generate significant returns for our stockholders. Also consistent with the Delaware Basin asset sale, we use the net proceeds from the New Mexico asset sale to further pay down debt. On that point, while we borrowed the initial $50 million from our credit facility to fund the third quarter cash outlay for the founder's acquisition, Our borrowings outstanding at September 30th were only $31 million higher than the end of the second quarter. The $19 million difference reflects our net pay down of debt and is another clear example of our commitment to improving our balance sheet, increasing liquidity, and better positioning the company for long-term success. Before turning this over to Travis, I'd like to discuss our updated outlook for the rest of the year. We anticipate a continued positive pricing environment benefiting from previously mentioned five wells coming online early in the quarter and a full quarter of production from the wells associated with the founders acquisition. We are now targeting total capital spending of between $35 million to $40 million in the fourth quarter due to increased drilling and completion activity. This brings our full year capital spending program to $148 million to $153 million. Our fourth quarter development program is focused on a balanced and capital-efficient combination of drilling three to four horizontal wells and two to three vertical wells, as well as completing and placing on line eight to ten wells. Additionally, our capital spending program includes funds for targeted capital workovers, infrastructure upgrades, leasing costs, and non-operated drilling completion and capital workovers. A primary assumption that underpins our capital spending plans is that WTI oil prices will range between $65 and $85 per barrel. As in the past, we have designed our spending program with flexibility to respond to the changes in commodity prices and other market conditions. We continue to expect fourth quarter sales volumes of 18,900 to 19,500 barrels of oil per day, barrels of oil equivalent per day, despite the reduced volumes from the New Mexico asset sale, and the additional volumes expected from the stepped up capital spending program. We anticipate 69% of fourth quarter sales to be oil. Additionally, our third quarter production exit rate of over 19,000 barrels of oil equivalent per day increases our confidence in our fourth quarter outlook. So with that, I will turn the call over to Travis to discuss our financial results in more detail. Travis?