Ring Energy to expand core Permian basin position through $75-million deal

Ring Energy Inc. will expand its operations in the southern portion of the Central Basin Platform (CBP) through a $75-million cash deal with Founders Oil & Gas IV LLC.

Founders’ CBP operations lie in the Permian basin in Ector County, Tex., and are focused on the development of about 3,600 net acres similar to Ring’s CBP assets acquired in 2022 from Stronghold Energy Operating II LLC, Ring said in a release July 11 (OGJ Online, July 5, 2022).

Production from the assets in this year’s second quarter was about 2,500 net boe/d (86% oil). Total proved SEC yearend 2022 reserves as calculated by Ring management are 9.2 MMboe (80% oil).

The low-risk inventory provides economic returns with potential upside from targeted downspacing, including about 50 low-cost, high rate-of-return undeveloped drilling locations, Ring said.

Ring has provided pro forma third- and fourth-quarter 2023 guidance to reflect the pending deal. Guidance also includes the impact of the recently completed sale of its Delaware Basin assets during second-quarter 2023.

The operator is targeting total pro forma capital spending of $67-77 million this year’s second half. The development program includes a combination of drilling horizontal wells on legacy Ring acreage and vertical wells on the acquired Stronghold and Founders’ acreage, as well as performing recompletions.

The capital spending program also includes funds for targeted capital workovers, infrastructure upgrades, leasing costs, and non-operated drilling, completion, and capital workovers.

The deal to acquire the Founders’ acreage is expected to close in this year’s third quarter with an effective date of Apr. 1, 2023.