Ring Energy, Inc.

Good day and welcome to Ring Energy's second quarter 2026 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 a touch-tone phone. To withdraw your question, please press star then two. Please note this event is being recorded. I would like now to turn the conference over to Mr. Al Petrie of Investor Relations Coordinator.

Please go ahead. 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 second quarter of 2026. We will then turn the call over to Sanu Jol Ring Energy's Executive VP, Chief Financial Officer and Treasurer, who will review our financial results. Paul will then return with some closing comments before we open up the call for questions. Joining us on the call today are James Parr, Executive VP and Chief Exploration Officer, Alex Dyes, Executive VP and Chief Operations Officer, and Shawn Young, Senior VP of Operations. During the Q&A session, we ask 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 an updated 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 or 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 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 followings with the SEC. These documents can be found in the Investors section of our website, located at 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 call is being recorded, and I would now like to turn the call over to Paul McKinney, our Chairman and CEO.

Thank you, Al, and good morning, everyone, and thank you for joining us. Before discussing the quarter, I'd like to spend a moment on the broader commodity backdrop because it continues to influence how we think about capital allocation, spending levels, and long-term value creation. My view remains that the current market continues to underestimate the impact of long-term global oil fundamentals that are likely to continue influencing crude oil prices long after the current crisis involving Iran and the Strait of Hormuz is resolved. Global demand continues to grow, driven in large part by developing economies seeking higher standards of living while current industry investment has remained relatively constrained as it has in recent years. These geopolitical events have reinforced the importance of energy security and have highlighted structural pressures throughout the global supply chain that suggests additional future demand. In my opinion, pre-war supply levels and strategic petroleum reserves have helped bridge the supply gap created by the Persian Gulf conflict, but they cannot serve as a long-term substitute for the upstream investment required to meet growing demand. Yet today, the forward strip continues to imply a market that eventually moves into surplus. Our view is different. We believe the industry will ultimately require higher commodity prices to incentivize the level of investment necessary to meet future growing demand. If investment continues to lag, the risk is not oversupply, but rather a tighter market than many currently anticipate. Now, regardless of whether our commodity outlook proves exactly right, Ring's strategy is designed, as you know, to succeed across commodity cycles. Our focus remains on disciplined capital allocation, capital efficiency, balance sheet improvement, and generating durable free cash flow for stockholders no matter what the price environment. The second quarter provided a good example of that approach in action. While oil prices moved materially higher during the quarter, our hedge position limited our participation in a portion of that upside. It is important to remember that those hedges were established earlier in the year when the forward market reflected a significantly weaker commodity price outlook and were intended to protect our cash flow, our 2026 development plan, and meet our debt reduction goals. Had oil prices not improved in the second quarter, we believe our strategy would have achieved our objectives allowing us to execute our development program as planned. Since oil prices were stronger during the quarter, we continued delivering on priorities within our control. The equity offering we completed gave us a balance sheet capacity to fund the acceleration of our development transition without losing focus on debt reduction. Rather than choosing between strengthening the balance sheet and investing in the highest return phase of our development plan, the timing of this raise allowed us to do both. Taken together, we believe these actions demonstrate the value of disciplined capital allocation and execution across commodity cycles. As part of our ongoing portfolio management, we are also continuing to evaluate select non-core assets that don't fit our long-term development plans. Any proceeds from potential dispositions and or transactions will be directed towards further debt reduction consistent with our capital allocation priorities. Operationally, we drilled seven wells and completed four wells during the quarter. In the Northwest Shelf, we drilled and completed one 1.5-mile horizontal well and one 1-mile horizontal well. In the Central Basin Platform, we drilled and completed one 1.5-mile horizontal well in Andrews County and one 1.5-mile horizontal well in Crane County. We drilled three additional two-mile horizontal wells in Crane County that were not yet completed at quarter end. As of June 30th, we were also in the process of drilling one saltwater disposal well in Crane County. Now, what gives us confidence in our strategy is the growing consistency we're seeing across the asset base. Each well improves our understanding of spacing, landing zones, completion design, and development sequencing strengthening our confidence in both inventory quality and development economics. Importantly, our focus today is no longer centered on proving the resource. Instead, it is increasingly about optimizing development, improving returns, maximizing the value of and expanding our inventory. To help you understand what we mean by our focus on completing this transition, is important for you to understand that we believe our undeveloped conventional assets are at a similar stage of evolution to what the broader industry experienced over the last decade when advances in drilling and completion techniques unlock significant value from the unconventional reservoirs in the Delaware and Midland Basins. Before industry could drill and complete longer lateral wells and co-develop multiple benches, they had to invest in frack water storage ponds, centralized production facilities, and produce saltwater disposal wells and facilities. Earlier this year, as we began transitioning to longer lateral wells and co-development of our stacked pay areas, we required similar investments. Continuing these investments will allow us to improve capital efficiency, expand inventory depth, enhance long-term returns. Some of these investments are summarized on slide 17 of our investor deck. So what does all of this mean for 2026 and 2027? Last quarter, we shared that we were accelerating the investments to transition our operations to achieve the focus we just described. This quarter, we continue the acceleration of these important investments and are updating our 2026 guidance and providing initial guidance for 2027. For the second half of 26, we now expect oil sales volumes to range between 13,000 and 13,950 barrels of oil per day for a midpoint guidance increase of approximately 2%. With respect to operating costs, We now expect LOE per barrel to range between $10 and $10.60 per BOE for a midpoint guidance decrease of approximately 2%. With respect to capital spending, we now plan to spend between $80 million and $100 million during the last half of the year, bringing our total capital spending for the full year, 2026, to between $158 million and $178 million. We believe this expansion is necessary for our transition to our development plan of improved capital efficiency that delivers superior economic returns, lower capital intensity, and higher cash flow generating potential than our historical performance. We also expect to fund this expanded plan primarily through operating cash flow with our debt trending down to our leverage ratio goal of one and a quarter times. Focusing on our initial guidance for 2027, we expect oil sales to range between 13,550 to 14,650 barrels of oil per day and a BOE sales volume to range between 21,500 and 23,500 barrels of oil equivalent per day for midpoint guidance growth of approximately 10% over estimated 2026 BOE sales. With respect to operating costs, we expect 2027 LOE per barrel to range between $9.80 and $10.60 per BOE for a midpoint guidance decrease of approximately 1%, demonstrating our confidence in our team's historical focus on future operating cost reduction. Regarding 2027 capital spending, we are initially guiding to a range of $135 million to $165 million for a midpoint reduction of approximately 10% compared to estimated 2026 capital spending. We believe this outlook reflects the quality of our asset base, the depth of our inventory, the benefits of the investments we've made positioning the company to deliver improved returns and sustainable growth in 2027 and beyond. With that, I'll turn the call over to Sanu to review our financial results, balance sheet, and outlook in greater detail.

Thank you, Paul. I will focus my remarks on the quarter's financial results, continued balance sheet improvement, and the financial implications of the outlook Paul discussed earlier. Starting with production, second quarter total BOE sales volumes were within our guidance range, averaging 19,990 BOE per day. up from 19,351 BOE per day in the first quarter, a sequential increase of 3%. Oil sales volumes for the quarter averaged 12,683 barrels of oil per day. Realized pricing improved meaningfully during the quarter, driven primarily by stronger oil prices. Our overall realized price increased 36% to $57.55 per BOE, while realized oil pricing increased 38%. Natural gas pricing remained pressured by ongoing Permian takeaway and processing constraints, with our average natural gas differential to 9x at negative $8.14 for MCF. However, we have begun to see modest improvements following the startup of the Gulf Coast connector expansion, and we expect additional relief as incremental takeaway and processing capacity comes online later this year. While we do not expect gas realizations to normalize overnight, the trajectory is moving in the right direction and should provide a more constructive pricing environment going forward. Revenue for the quarter totaled approximately 104.7 million, supported by average realized oil prices of approximately $95.45 per barrel. As Paul noted earlier, while crude oil prices strengthened significantly during the quarter, our hedge portfolio limited participation in a portion of that upside. Those hedges were established to protect cash flow and support balance sheet improvement and preserve financial flexibility during a period of commodity price uncertainty. As highlighted on slide 21 of our investor presentation, Our focus on cost discipline continued to drive strong operating performance during the quarter. Second quarter LOE was $18.4 million compared to $18.1 million in the first quarter of 2026. On a per-unit basis, LOE improved 3% sequentially to $10.12 per BOE from $10.41 per BOE, while all-in cash costs declined 1% and many more. We also want to make sure that you have a good understanding of what we're talking about in terms of what we're talking about in terms of what we're talking about in terms The quarter also represented an important milestone in strengthening the balance sheet. We completed an underwritten public equity offering that generated approximately 65 million of net proceeds, which were used entirely to reduce revolver borrowings. As a result, liquidity increased to approximately $226 million. Outstanding borrowings declined to approximately $360 million. and leverage improved to approximately 1.7 times on a last quarter annualized basis. We remain fully compliant with all financial covenants and continue to target long-term leverage of less than 1.25 times. The progress we have made strengthening the balance sheet is what allows us to be more proactive in allocating capital across the business while remaining disciplined financially. As shown on slide 14 of our investor presentation, our capital allocation framework remains straightforward. Maintain a strong balance sheet, invest in high return opportunities, preserve optionality through commodity cycles. That framework guided our decisions during the quarter and remains central to how we are positioning the business for 2027 and beyond. Consistent with that approach, we increased second quarter capital expenditures to approximately $43.2 million to support the continued evolution of our development program toward co-development paths with longer laterals that will result in a more capital efficient operating model. This decision reflects our confidence in the quality of our inventory and the improving economics we see across our development program. As highlighted on slide 17 of our investor presentation, these infrastructure investments are expected to lower future development costs, improve well-level returns, and enhance capital efficiency across future drilling programs. Based on our initial 2027 outlook shown on slide 19, which contemplates drilling approximately 20 to 30 new horizontal wells, we estimate these initiatives could reduce future drilling and completion costs by at least $7.5 million. This estimate assumes savings of approximately $50 to $100 per lateral foot. Moving to our hedge position, For the remainder of 2026, we currently have approximately 1.7 million barrels of oil hedged, or approximately 70% of our estimated oil sales based on the midpoint of updated guidance. Importantly, as illustrated on slide 20 of our investor presentation, approximately 30% of our expected oil production remains unhedged. and a significant portion of our hedged volumes are structured as callers with attractive call ceilings, allowing us to participate in higher commodity prices while continuing to protect cashflow and support our development program. We also have 2.4 BCF of natural gas hedged or approximately 62% of our estimated natural gas sales based on the midpoint. Our quarterly breakout of our 2026 Hedge positions, please see our earnings release and presentation, which includes the average price for each contract type. From my perspective, the most important financial takeaway is this. Ring is operating from a position of strength today, and we believe that position continues to get stronger. Over the last several quarters, we have materially improved our balance sheet, increased liquidity, and enhanced financial flexibility. At the same time, we continue to identify opportunities to improve the business and reduce costs. As highlighted on slide 16 of our investor presentation, the initiatives already implemented across our operations have reduced cash costs by approximately $1.50 per BOE, or roughly Thank you. Thank you. Thank you. and create long-term value in 2027 and beyond. With that, I'll turn it back to Paul.

Thanks, Anu. As we discussed throughout today's call, Ring remains focused on creating long-term shareholder value through disciplined capital allocation, operational execution and financial discipline. We made significant progress strengthening our balance sheet this quarter. We also enhance our hedging program, exposing future production to potentially higher commodity prices. Our drilling results continue to encourage our pursuit of transitioning to longer lateral horizontal wells and the co-development of our stacked multi-zone areas. The updated 2026 guidance and the initial 2027 outlook we provided today reflect the confidence we have in our asset base, operational momentum, and abilities to continue improving capital efficiency and free cash flow generation. We believe Ring is stronger in every regard and better positioned today than it was at the beginning of the year. We remain committed to executing our strategy, strengthening the balance sheet, and creating long-term value for stockholders. With that, operator will open the call for questions.

We will now begin the question and answer session. To ask a question, you may press star then 1 on your touchtone phone. If you are using a speakerphone, please pick up your handset before pressing the keys. If at any time your question has been addressed and you would like to withdraw it, please press star then 2. At this time, we will pause momentarily to assemble our roster. Our first question today comes from Jeff Robertson of Water Tower Research. Please go ahead.

Good morning. Paul, in the past, you've talked about rings' organic growth potential. And with the initial plan you're laying out for 2027, it looks like you're capitalizing on a lot of the work that the teams have done over the last couple of years as hydrating that potential. Can you just talk about where you stand with respect to evaluating the asset base and identifying incremental drilling opportunities maybe versus where you were at the beginning of 2026?

Sure. Yeah, good morning, Jeff, and thanks. That's a good question. As you know, we have spent quite a bit of time over the last several years. So here we are, we're going into year four, and we believe by the end of this year we will have also grown organically. So what do I mean by that? You know, having our geoscience and engineering teams and our land teams working together evaluating the lands that we operate, looking for untapped or undeveloped opportunities on those, and just from an organic standpoint. And then going out and leasing additional lands that extend those areas because we know we have the confidence in the economics and the returns and all that. We're also in the process of testing new zones. We talked about that a little earlier because in these stacked pay areas, we're not alone out here and a lot of the things that we are doing today were pioneered by others. So, you know, multiple bench development in the Midland and Delaware Basin is very similar to the stacked pay that we have in the Central Basin platform. However, these stacked paves that we are pursuing are conventional in nature, so they're conventional rocks, so they have higher porosities and permeabilities. And in some of these areas where the porosities and permeabilities were not as economic due to older technologies, today with the application of horizontal drilling and especially longer lateral horizontal drilling, you can develop these resources. And then go into co-development where you're completing all of these stack pays all on the same operational initiative significantly reduce the cost. And so the real savings in being able to do that is investing in the infrastructure like we have. And so getting back to your original question, We believe we see opportunities up and down the Central Basin Platform in all of the areas that we currently operate. We are continuing to evaluate extensions from those areas and we're leasing and we're looking for more opportunities. We believe by the end of the year our portfolio will be significantly higher in terms of the inventory for us to prove. So over the last couple of years, as you know, earlier on, we had a good medium term development program of five to 10 years. And we've now gotten to the point where our inventory is over 10 years. We believe by the end of this year in 2027, with the efforts of our geoscience teams and land teams, we believe that we'll significantly exceed that as well. Does that answer your question?

Yes, it does. Paul, I believe you started 2026 with a capital plan that was penned on a $60 oil price deck or in the low 60s. Can you share what you're pinning the 2027 plan on? Yeah, so the 2027 plan is

as we're putting together currently will be a higher capital spending plan than we started at the beginning of this year. So let's go back to the beginning of the year. We had a modest capital program and we were anticipating a price environment that was going to test even $50 oil. And so we spent a lot of time strengthening our floors. So, you know, layering in hedges to strengthen the floor so we could guarantee we'd have at least $60 that the well had because we believed we needed that to fund the development program to finish testing all these ideas that you and I just discussed about the stack pay intervals up and down the Central Basin platform. And so... And so by looking at 2027, OK, let's go back up. When oil prices increased after the war with Iran initiated, and then also the equity raise, that positioned this company to strengthen the balance sheet strongly and then take advantage of the higher prices to start making these investments a little bit earlier in the infrastructure necessary to have the higher capital efficiency of these longer laterals and co-developed locations. and so we're really excited about that. But the capital spending levels next year are going to be pretty much in line with what we've done in the past. Typically, this company has had $150 million plus or minus type annual capital budget. Next year, we're planning to spend a little bit more than that, you know, 158 to 100 or so, 160 type million dollars. But we believe that because of the added capital efficiency, We will end up delivering more barrels the day of production and more barrels of reserves per dollar spent as a result of the investments we're making this year. And it's going to make for significant production growth that is basically organic production growth that we have not delivered in the five years or six years that I've been here. So we are positioning the company for accelerated production growth, which means, depending on prices, accelerated EBITDA growth. and this also is setting the stage for even potentially a stronger 2028. Thank you.

Yeah, Jeff, and I can just add a little more color to that just to give you a little more definitive answer. You know, we're running $75 in the near term for this next quarter and then we've stress tested our development program going into 27 and even taking it down to a $60 oil price in 27. the economics still work and we're able to marginally generate free cash flow.

Thanks, Sunil.

The next question comes from Po Frat of Alliance Global Partners. Please go ahead.

Hey, good morning.

Hey, good morning, Po.

Hey, you know, congrats on the offering. There clearly was an impact on your CapEx. Can you potentially talk about whether there's going to be less limits on how much you hedge going forward? You've in the past highlighted that the Revolver has sort of limited your ability to capture higher prices. Going forward, are you going to be in a better position to capture the upside if commodity prices are higher?

Yeah, that's a complex question. I think we should probably just go back and start it. Just kind of lay the framework to address what does our credit facility require. So our credit facility requires that we hedge 50% of our oil and natural gas production for the first 24 months. And during the time period where our leverage ratio is above 1.25 times and the draw against our barn base is greater than 50%. And so you may have seen in our press release and also in what we just discussed that we are very specifically focused on getting our leverage ratio down below 1.25 times. Because then at that point, as long as our draw against the barn base is less than 50% of our barn base, Then 50% of the longer-term hedges, so months 13 through 24, they fall by 50%. We believe that is a key. If you go back and analyze the hedges over the last five or six years, the majority of the losses associated with those hedges were associated with those longer-term hedges. Hedges that we put out in place during months 13 through 24. And so to the degree that we can lessen that, we will. And so what that does allow, though, it allows you to move more towards an opportunistic hedging strategy because we really do believe, strongly believe, that we like to hedge our capital program each year to make sure that we have a protected position that protects that capital program because the capital program is what delivers the EBITDA and also positions the company for sustainable growth in the future. So if you look at our hedge position today, right now during the third quarter and fourth quarter of 26, we're hovering around 30% of our oil production exposed to higher prices. But when you move into the first half of 27 and the second half of 27, now we're talking about 60, 61, 63, 64% of our anticipated and forward-looking production being exposed to higher prices. All of this is summarized on page 20 in our investor deck, but it does demonstrate real meaningful upside to adjusted free cash flow for the company. Did that answer your question, Paul?

It did. I guess the short answer, Paul, is that, you know, the offering helped, but it didn't get you to where, you know, the hedging programs can be less of a constraint. You're still going to have to grow production, capture higher prices, and then hopefully, you know, you'll be at that point where the hedging program won't limit your upside as much as it has in the past.

Yeah, and so one of the points, Poe, that I think I should also throw in, if you look at what these prices are doing to our trailing 12-month EBITDA, which is a component of that leverage ratio calculation, see, we are rapidly dropping our leverage ratio. We anticipate being in a position to qualify for each hedging requirements in months 13 through 24 by as early as first quarter next year. Would you say that, folks?

Yeah, it's all price dependent with the volatility. Right. Yeah, but with this elevated program, it does put us in a much better position with the banks in our leverage ratio.

Great. That's helpful. Thank you.

You bet.

Are there more questions?

The next question comes from Noel Parks of Tuohy Brothers. Please go ahead.

Hi, good morning. You know, you're talking about your continued leasing program. You're looking at doing for the horizontal plays that you're sort of saying and looking at many areas of the Central Basin platform. And I'm just curious, now that you have sort of like the runway for the horizontal play and you have a shot at some potentially compelling economics there, when it comes to sort of the land operation, does sort of that simplify What you can pay in bonuses in a given area or does that sort of complicate the whole land equation as you look to develop horizontally?

No, I mean it doesn't complicate things. It's pretty much the same type of business. The real challenge is finding the opportunities in an area like the central basement platform that is so mature and most of that acreage out there is held by others. There are areas, in our opinion, that have been overlooked even in the historical development of the Central Basin Platform because even though some of these identified pay zones that do retain and hold hydrocarbons, historically the porosities and permeabilities were so low and the technology back then was what it was, nobody ever really leased the lands and pursued it. We do believe that the Central Basin Platform still has a tremendous amount of opportunity. If you go look at page 10 in our investor deck, we've pointed this out in the past, you can see how more developed the Delaware and Midland basins are from the standpoint of ownership of larger organization public companies and a lot fewer privates. Well, the Central Basin Platform and the southern part of the Northwest Shelf have a lot more opportunity. And even those lands and producing acreages that are owned by the larger companies in the Central Basin Platform are still not core to them. They've demonstrated a willingness to sell. So we believe there's more opportunity in the Central Basin Platform and Southern Shelf to grow than what Little Ring can probably pursue all on its own. And so I'm not going to say we have infinite growth capacity. But at this point, we have not seen the end to our potential. We're very excited about that. We have allocated more money to land acquisitions this year. We are not pointing out where we're buying land because we just don't want to have the increased competition. It is already an area of significant competition anyway. But we are making progress, and I cannot wait to disclose the progress as we progress throughout the year.

Great. Thanks. And I just wanted to take a minute to get your thoughts on on crude oil macro, and sort of what your current theory of the case is as far as why we don't have more strength in, say, the 2027 Strip and Beyond, considering that the months tick by and it still doesn't look like there's really a definitive sort of resolution to what's going on with Iran.

Yeah, so Noel, there's a lot about what goes on in those open markets and what influences future prices that just I'm not qualified to even address. But I do have an opinion that that foreign strip does not reflect the fundamentals going on right now. So if you just look at the amount of production that has been curtailed just through the straight of home moves. Now, we found alternative routes for oil to come out of there. that have helped. But if it wasn't for the Strategic Petroleum Reserve scattered around the world, not just the United States, but other people as well, we would have been in a lot worse shape than we currently are. So we also had the benefit of a lot of floating and onshore storage that, if you remember before the war, that was the justification for why we really thought that oil prices could go below $50. Well, now all of that storage has been consumed, and all of the storage worldwide, I mean, I think there was an article just yesterday by the Strategic Petroleum Reserve, or earlier, maybe last week, about the perilous level that our current Strategic Petroleum Reserve is at, requiring infrastructure repair there and a few other things before it can be fully utilized. And so we're probably talking about just from a standpoint of meeting demand, the Strategic Petroleum Reserve still has more to pump out based on the last order that our president gave. But that's going to be gone in probably a month, and hopefully the Strait of Hormuz will be resolved by then. But the reason why I believe there's going to be additional pressures, because not only will the world decide to refill the Strategic Petroleum Reserves that we've depleted, because that's just the rational thing to do. But we've now read that several countries around the world have now decided to either build a strategic petroleum reserve for themselves as a result of this disruption, and others have said they're going to expand the ones that they have. And so all of that is going to be in addition to the demand that we've seen. And if you go back and look at the emerging economies around the world, there are countries now with large populations that are now seeing explosive growth in their middle class. And so what happens, those middle class individuals that are going to want to have the same lifestyles that the rest of the world has enjoyed. And so I just don't see a reduction in the historical demand for oil that we've seen. And all I see are additional fundamentals that are saying that we're going to need more oil in several different ways. Now, of course, we are becoming more and more efficient. Our automobiles are using less fuel. you know, gasoline or whatever, getting better fuel mileage. There's a switch to EVs. I don't think that the switch to EVs is going to have as big of an impact as many people have said. But I also see demands on the natural gas side to generate the energy that these data centers are going to require. So everywhere I look, I see the fundamentals point to higher demand and for the last, in my opinion, since the last big oil price shock the world saw back in 2028 and then the other one after that in 2014, I mean, the world has not been investing. So we've been relying on the spare capacity of all of the world's supplies and we haven't been investing at a rate and so on. There's going to be a point in time, and I believe this disruption we've seen with the Iran war may have accelerated the crossing of the world's ability to deliver oil versus the world's demand for oil. We don't know that. That's something that is harder to discern and it comes out over months of data, but I believe we're approaching that and something doesn't change soon. and so I've even mentioned in the past, at least with my guys and with others, a good $80, $85 strip price that's flat would incentivize the capital investments that the world needs to start making investments now so that we never do cross lines where the demand actually exceeds our ability to deliver. But if we don't, I believe in the next year or two, we're going to see those lines cross of supply and demand and it takes years to build the supply and so we'll see how things go. I'm a firm believer that as we go into 27 and 28, the likelihood of seeing $50 or $60 oil becomes less. I'm not saying that we won't see it because we have stranger things happen in commodity markets. but no, the basic fundamentals right now to me appear to be strong going into 27 and 28 and we want to make sure that we position ring energy so that we can deliver the organic growth to take advantage of what I believe will be a stronger market environment.

Great, thanks a lot. There were a couple points in there I hadn't had on my rare experience so I appreciate it. Thanks a lot.

You're welcome.

Our next question comes from Jeff Robertson of Water Tower Research. Please go ahead.

Thank you, Paul. Just to come back to the asset base, with respect to the horizontal wells that you have in the second half plan for this year and next year, is the lateral length being dictated by the shape or the geometry of the leases, or are there other reservoir issues that are helping determine the optimal lateral lengths?

In most of our areas, the lateral length will be dictated by the units and the land position. In the last two years, we have been focusing our land acquisition efforts to ensure that we can unitize and develop these longer laterals. and so that's been a trend that we've been saying we wanted to do a year, year and a half, almost two years back and that's the primary driver in that regard. Now in the south where we have historically drilled the inexpensive verticals and applied multi-stage fracking to these verticals and then drill them all out and bring them along, in those areas There are still areas that will prevent us from drilling the longer laterals because of the way the units are developed and all that. That's a little bit of work that the Land Department needs to dive into, and there are solutions to that. Our goal, though, is to convert all of our units to the extent that we can so that we can drill these longer laterals and take advantage of the increased capital efficiency. So when you can reduce your lateral cost by $50 to $100 a foot by pursuing this technology and drilling along your laterals, it's just a smart thing to do.

Thank you. Jeff, if I may, I'd like to add something to that that Paul covered. On slide 19, we actually, you know, one of the big things we're doing now and why we updated the guidance and our new guidance actually shows that we're going to drill longer laterals is also the infrastructure dollars that we've been spending, right? Building the facilities, the frack pits, and then also getting enough disposal for these longer laterals obviously bring on more production and also water. And so we needed the infrastructure dollars to be able to drill the mile and a half and two mile wells in the south. So that's the other reason.

Thanks, Alex.

The next question comes from Poe Fret of Alliance Global Partners. Please go ahead.

Paul, you mentioned asset sales and you prepared comments. How much could you generate from asset sales and any idea of the timing of those sales?

Yeah, that's a challenging question to answer. I don't think there is a right answer to that. Some of the ideas we have are in their infancy stages. In other words, we're looking at what other people are doing. Some people have approached us saying, hey, we really like this or that. And so those thoughts or those processes haven't moved very far at all along. So it's kind of hard for me to come up with a number. There are other initiatives that we're looking at that are probably a little bit farther along. but I think it's premature to talk about how much money we think we can raise. But if you just look at our history, so since I've been here with Ring and I'm approaching six years now, we have continued to optimize our portfolio. We've made acquisitions in the past and we found that in those acquisitions there were assets that did not fit our criteria and so we were careful to spend them off for a whole bunch of reasons. We made the decision to exit our position in New Mexico and other assets. And so this is something we routinely do. And the reason why we mention it again is because we want to remind our shareholders that this is still another avenue to help strengthen the balance sheet and put the assets that we don't value as much into the hands of people that value them more, who are willing to pay us the premiums for them. And so we're going to continue to do that. And we'll probably never stop doing that. to be honest with you. But today and at this point right now to give you a range, I think I'd be way out of line and I think my CFO might yank a knot in my tail if I were to come out here and say two months. Appreciate it, Paul. Sorry to not answer your question, Paul. No, that's all right.

This concludes our question and answer session. I would like to turn the conference back over to Mr. Paul McKinney for any closing remarks.

Thank you, operator. And on behalf of the entire team and board of directors, I want to once again thank everyone for listening and participating in today's call. We are pleased to have posted solid operational financial results for the second quarter of 2026, and our outlook for the remainder of the year remains solid. We will continue to keep everyone appraised of our progress and thank you again for your interest and great energy. Have a great day.

The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.