Ring Energy, Inc. (REI) Earnings Call Transcript & Summary

Greetings. Welcome to Ring Energy's introduction of Mr. Paul D. McKinney, new CEO and Chairman of the Board. [Operator Instructions] Please note that this conference is being recorded. At this time, I'll turn the conference over to Mr. Tim Rochford, Co-Founder. You may begin, sir.

Thank you, Rob, and thank all listeners for joining us today for Ring Energy's formal introduction to Mr. Paul McKinney, Ring's new CEO and Chairman of the Board. Again, I'm Tim Rochford, Co-Founder of the company. Along with me today is Kelly Hoffman and of course, Paul McKinney. Today, we are introducing Paul McKinney as Ring's new CEO and Chairman of the Board. We hope to provide you an overview of the process that has led us to this transition. At that time, I'll turn the call over to Paul and give him an opportunity to share his vision for our company with you. As this call is purely an introduction to Paul, there will be no question-and-answer period at the conclusion of our call. However, at the end of today's call, we will provide contact information for you to be able to call and schedule a time to visit with Paul per your wish. Again, thank you for joining us today. As we all know, 2020 has presented all energy companies, large and small, with unique challenges. I'm so very proud of the job our management team has done since inception. There is no doubt in my mind that Ring is one of the most cost-effective conventional operators in the Permian Basin. However, our job doesn't stop there. As a public company, we must examine every opportunity that has the potential to enhance the value of the company. Over the past 12 months, the Board, in conjunction with our current management team, has examined a number of projects, ideas, suggestions that have the potential to address the disconnect, the major disconnect we feel between the true underlying value of energy -- of Ring Energy and its current stock price. So before going any further, I'm going to ask Kelly Hoffman to say a few words. And as all of you know, Kelly and I have had the same vision for this company since day 1. So I'm going to turn it over to Kelly. Kelly?

Thanks, Tim, and that is absolutely correct. And this has, of course, been -- it, to me, is a very, very exciting time. In 2011, when Tim and I first met, we spent a lot of time together. We shared our thoughts as to the opportunities and potential for a young E&P company like we built back starting in 2011, as I said, and then just kicked off the company in January of 2013. It became very apparent to me at the time that we shared the same philosophies and visions and as to what the company should look like. And of course, that vision has never changed. And although the marketplace has dictated new requirements in regards to how we operate, Ring has emerged as a leading conventional operator and a -- with a tremendous future. And I've had the opportunity to work with a team of true professionals and congratulate the efforts of my team and the consistent results that we've had and the stick-to-itiveness, if you will, with my team and how they come in there and continue to fight this battle and do a good job, a very good job. And in my position as CEO and Board member, I've been involved in all aspects of examining every opportunity to improve the company with an eye on the ultimate goal of enhancing shareholder value. That's always been in the center of our thoughts, mine and Tim's as well. I'm a large shareholder myself. I embrace any legitimate opportunity that can assist in accomplishing the goal that we set out for ourselves and that's to drive the shareholder value. And in my conversations with Paul, I've had no doubt he shares our vision as to what Ring could be and should be. His credentials and experience, they speak for themselves. This is a solid individual who knows how to move things forward. He's coming with some fresh ideas, some new concepts, maybe. I mean, I'm excited about it as I'm excited for Paul, as I know our company is postured for future years of growth and prosperity. And that's what I want to leave with everyone today. With that, Tim, I'm not going to spend all my day talking. I'm going to give Paul a chance to let everyone hear from him.

Yes. You bet. Well, listen, thank you, Kelly. And let me just say that, as I've stated on numerous occasions, our door has always been open to any and all suggestions from all shareholders. That's always been our policy from day 1. And I think everybody on this call knows that. Operationally, we have continued to produce positive, consistent results. From an investment perspective, we feel there's a lack of understanding and appreciation for the value this company represents. Over the past 12 to 18 months, we have explored numerous opportunities that have the potential to address a number of current concerns. Through this process, I was introduced to Paul McKinney. Paul was referred to me because of his extensive industry knowledge and background with young companies. His immediate knowledge of Ring and its operation and its core assets gave me the confidence and assurance that his vision for Ring aligned with mine and the entire Board. Further meetings and conversations discussing his strategies to achieve that vision only strengthened my opinion that Paul could be and should be the right choice to lead this company. At my request, Paul met with the Board, presented his overview and assessment of Ring, together with his strategies, and as a result of that, the Board certainly concurred with my assessment. So at this time, I'd like to formally introduce to you, Paul McKinney, our new Chief Executive Officer and Chairman of the Board. Paul?

Thank you very much, Tim, and you're very, very gracious, by the way. I'd like to start off thanking both Tim and the Board of Directors for this opportunity. Let me also congratulate Kelly and the entire management and operational staff on the work they have done in a very difficult market to set up Ring as it is. My vision for Ring is not unlike Tim and Kelly's, just like it has been said. It's interesting, like-minded people think alike. And so our vision for the future is very much alike. It is a future of growth and prosperity. And over the next few weeks, I will be investing my time learning more about the company, the people and the company's assets and operations. Part of that time will also be spent formulating a program of communication with our shareholders and analysts as to our goals and how we intend to accomplish those goals. I look forward to meeting our shareholders, and I hope to find time within -- with many of you in the next coming days to begin that process of getting to know each other and building what I hope to be a long-term relationship. Now with respect to my vision, it is a pretty simple vision to say, but oftentimes, especially now challenging to accomplish. But the bottom line is my vision is pretty simple, and it's to deliver competitive and sustainable production and reserve growth on a debt-adjusted per-share basis. And we're going to do that by doing the things that Ring has done historically. We're in a very good basin and a very good area to deliver profits. If you look at Ring's greatest strengths, it has a very solid production base that provides stable cash flow and liquidity. Ring has a very enviable low cost, undeveloped inventory of drilling opportunities that provide high rates of return even at these prices. And we believe that those assets together will deliver long-term value and growth to the shareholders. Now the biggest challenges facing this company, first of all, the uncertainty associated with this pandemic-induced economic downturn. That's a big one. The company's liquidity and debt, I mean, the bottom line is we've got some work to do there. We can't do anything about the economic downturn, but we can do something about our balance sheet. So I'm going to concentrate on strengthening Ring's effectiveness and efficiency. They have always been a very effective and efficient company. But you can never -- you never stop pushing on those issues. Initially, we'll begin working on ways to improve our liquidity as well. I'm sure that there will be more to add once I get past the drinking from the fire hose stage. And so -- but for now, that sums up what I'm prepared to say now, but in the next coming weeks, there's going to be a lot more to roll out as I become more intimate and familiar with the details of the company. We will be releasing additional information over the next few weeks, and I fully intend to hit the ground running. And so with that, Tim, if you don't mind, I'm going to turn it back over to you.

All right, Paul. Thank you. I appreciate that. I'd like to make a few closing remarks before ending this call. I've had the opportunity over the past 30-plus years to start, build, sell and merge 3 E&P companies. I recognize the need to provide flexibility and support to management. In that regard, I have removed myself as Chairman of the Board, but I'm excited to remain indefinitely in an advisory capacity, working directly with Paul and providing any assistance or advice he requires that will ultimately result in reaching our goals. I want to personally thank and congratulate every member of the Ring team for their tireless, unselfish efforts. I'd also like to thank the Board of Directors for their hard work, guidance and never-ending support. Thank you, all. I know I speak for the Board and management team when I say we are very excited about the future of Ring Energy and embrace this transition as a very positive step in the ongoing growth of our company. Now if you're interested in arranging a time to speak with Paul, please reach out to Bill Parsons. You can find his information -- his contact information by going to the company website, which is www.ringenergy.com. He'll be happy to set up a call or set up a time that's convenient for all of you. Now in addition to that, I should mention, because I know a lot of you are curious, yes, Delaware is moving forward and is scheduled to close a week from tomorrow. That's the 9th day of October. We're all excited about that, and it's going to happen. So with that, I thank you all for dialing in today. I appreciate your support. And I especially want to say to those that have been around the last number of years, supporting us, thank you, thank you, thank you. And for now, I'm going to say so long for now.

Thank you. This concludes today's conference. You may now disconnect your lines at this time. Thank you for joining us today.