Ring Energy, Inc. ($REI)

Thank you for joining today's fireside chat with Ring Energy's senior leadership team. We're joined today by Chairman and CEO, Paul McKinney; COO, Alex Dyes; Chief Exploration Officer, James Parr; and CFO, Sonu Johl. I am Jeff Robertson, Managing Director for Natural Resources here at Water Tower Research. Before we begin, I would like to remind participants that today's discussion could include forward-looking statements as of today, May 20, 2026. Ring's disclosures regarding forward-looking statements can be found under the Investor Relations tab of its corporate home page. We may refer to some slides from Ring's latest investor deck, which can also be found under the Investor Relations tab of the company's home page. With that housekeeping out of the way, Alex, Paul, James and Sonu, thank you for joining us today.

Thank you for having us. We really enjoy the opportunity to get our word out.

Ring is an exploration and production company whose assets are concentrated on the Northwest shelf and Central Basin platform areas of the Permian Basin, where reservoir targets primarily consist of multiple stacked formations with known hydrocarbons. Ring and offset operators are turning to horizontal drilling to expect greater value from some of the producing reservoirs. First quarter 2026 production averaged about 19,350 BOE per day, of which 63% was oil, and ring's adjusted EBITDA was $38.3 million. The secondary equity offering of 44.4 million shares was priced on May 12, 2026, raising gross proceeds of approximately $60 million.

Paul, I know we're going to come back to this a little bit later, but I would just like to start in light of the equity offering, can you just share the rationale behind the offering and how the proceeds accelerate Ring's deleveraging goals?

Yes. I mean that's obviously the element in the room, right? A lot of the shareholders are still questioning the rationale behind this. But before we get into the rationale, let's take just a step back and put all of this into context. And so if you remember, when we joined Ring Energy in the fourth quarter of 2020, Ratings two biggest challenges. The biggest one was our leverage. We had a balance sheet that was very over-levered or at the time that I joined, of course, that was mid-period 4x. At the end of that period, we're still 3.6x levered. But the other thing was size and scale. And so what size and scale is necessary to be relevant in the marketplace. And so there is an argument to be had as to which of these two are more important. I don't really want to waste a lot of time on that. But to kind of give you an indication where I fall debt has risk that size and scale doesn't, okay? So in a $75 oil environment, we could do both. We could grow our production, and we could also continue to strengthen and improve the balance sheet by paying down debt. At $70 or below $70, we cannot do that. And so when prices became tough, we focused on the balance sheet. And so here we are today. Even though we are in a higher price environment where we can do both, our two biggest challenges are still size and scale and balance sheet. And so -- and now we're in a higher oil price environment. And we believe that these higher prices are probably likely to be here for longer than what the market is currently implying. But our leverage ratio at the end of the first quarter was still 2.4x. And without the equity raise, we could have continued to reduce debt meaningfully, and we would throughout the rest of this year, paying down debt with a higher cash flow with these higher prices. But that is a very slow process even at these higher prices. And our balance sheet would still prevent us from taking advantage of the opportunities that we believe if this price cycle is going to provide. And so depending on that course of action, it also depends on our strategy of hope. We believe prices are going to be higher for longer, but there's no guarantee that they're going to be. And today, it's kind of a good environment of the cyclical nature and how this market responds to the progress and the things that are going on that are beyond our control in the Middle East. And so we needed to position the company to take advantage of the options that we believe this price cycle is likely going to provide. And so the rationale is really simple. We're accelerating value through balance sheet strength. We executed the equity offering from a position of strength, not necessity. We took advantage of a constructive market window to strengthen the balance sheet sooner, reduce debt faster, lower interest expense and give the company more flexibility in a volatile commodity environment. We accelerated our debt plans by over a full year, better positioning the company to take advantage of the opportunities this price cycle are likely going to present, especially when you consider the virtues of our 2026 capital program, we're going to get into that a little bit later on. We recognize that this issuing equity does create near-term dilution to our shareholders. But we're also shareholders. And so we don't take that lightly. But we do believe the trade-off makes sense, especially in light of the opportunities that are in front of us. We believe that the near-term dilution in exchange for a stronger company, lower financial risk, more flexibility to execute the plan that's in front of us or maybe in front of us, we believe that's really important. We will partially overcome the dilution for this deal with close to $5 million of lower interest expense, which is a compounding virtue, by the way and companies with lower leverage ratio trade at a higher multiple. And so importantly, this is not a change in our strategy, especially when it comes to regarding our balance sheet, it's basically an acceleration of it. Debt reduction remains a core priority. Capital discipline remains a core priority. What this transaction does, it allows us to pursue those objectives more efficiently while also giving us the flexibility to invest in higher return opportunities across our asset base. Those opportunities include extending laterals and investing in water handling. If you look at the 2026 program that we were so anxious to protect earlier in this year by raising our floors and layer in hedging to protect our cash flows. This capital program really has the opportunity to increase our capital efficiency and going forward and set this company up for organic growth. It does not depend on acquisitions. And that's significant because most of the peers that we compete with out there in the marketplace, other people or other companies you can invest in, they grow basically through A&D. And so we've got more than one tool in the toolbox, so to speak. We're going to talk more about that and we'll turn it over to James. But reducing debt sooner, reduces risk. It gives us more flexibility through the commodity cycles and helps make future cash flow more durable. And so as long-term shareholders ourselves, we believe that this is the right outcome for our shareholders.

Your point about growing or the organic growth in the asset base, Ring has built its foundation on conventional assets in the Permian Basin. Why do you target those types of assets to build a sustainable production profile and one that you can support organic growth as you progress towards your leverage reduction goals?

Yes. Well, we've focused on conventional oil-weighted assets because they give us the durability and strong margins with a decline profile that supports long-term free cash flow. And that's the bottom line. The conventional zones we target also have lower drilling breakevens with competitive high returns. And the entry costs for this strategy are still lower when compared to the unconventional shale opportunity that others are pursuing. And so that's really important.

Okay. One thing I wanted to touch on was acquisitions, which had played a big role in Ring's growth over the last number of years. Acquisitions bring free cash flow because you target producing properties, but they also bring development opportunities. Does the market for conventional assets, either in the areas that Ring would look? Does it differ very much from the market from unconventional assets in the Permian?

Yes, they are different. They still remain different. I don't know how long they will be different. In my -- as I observe transactions out there in the marketplace, people are paying considerable valuations for the shales still. And so the entry costs for unconventional assets like what we're pursuing are -- they're lower. And so that allows us still to be more competitive, generate higher returns on the acquisitions we make. If you pay through the nose for something what's left over when you're done is -- you better have bought a lot of it because it's -- you're going to be like the Walmart virgin. You got to -- you make smaller margins on the larger resource base. But the entry costs for us are getting more competitive as time goes on. And so -- we do believe there's opportunities out there. We -- if you look back on our history in the past, most of the deals we pursued, they were initiated through negotiations. They were not assets that are out there in the marketplace at a time, they came through negotiation. Now one of them the Stronghold deal. It turned into a process, and we've ultimately succeeded in that. But the founders and the Lime Rock deals, both of those were negotiated deals. We like that. We believe that there's opportunities out there. But the bottom line is our balance sheet today is not in the position so that we can take advantage of those. And so that was -- and let me back up. The balance sheet today is in much better shape, and it's going to be even better by the end of this year. But without this equity deal, we would have been -- we would still be essentially out of the market for pursuing opportunities. So if an opportunity does present itself out there that is accretive to the shareholders and it fits our strategy and our growth plans with a balance sheet of $2.4 billion, just -- it's really tough to be competitive in that environment.

Alex, let's talk a little bit about operations. Ring has a history of drilling horizontal wells on the Northwest Shelf, targeting the San Andres formation. And you we've shown good progress increasing drilling efficiency on the existing asset base. With the stacked nature of the reservoirs that you have in the Central Basin platform, in the North or shelf. Can you talk about what's really driven the drilling efficiency gains that the company has posted?

Yes, absolutely. And just, first of all, thank you, Jeff, for hosting us, and we're excited to share with you and with our investors just really -- what's really happening in the transition. So let's take a step back before we go into capital gains and efficiencies and just talk about like what's really happened over the last decade. So there's been a big transition. Obviously, in the basins, the shale revolution, big longer horizontals in both the Delaware and the Midland Basin. But for us, since 2015 in both the CBP and Northwest Shelf, over 1,200 horizontal wells have been drilled. Of those, Ring has been a part of about 30% of this over that last 10 years or so. So what's really happened today and why now? Why is it really work today? Over that time, there's been tons of horizontal technology improvements. So you're drilling longer laterals. We're staying in zone. We're actually optimizing the landing zones, and we figured that out even just on our core acreage. And much -- and we'll get to talking about more of like where we're taking pains into some of these newer benches. But two, there's optimized fracs and again, the longer extended laterals in our benches has really transformed things. So I think that, that's really what's led to a lot of the efficiencies today. So if you look at our deck on Page 17, we actually talk about that, where we show our cost per lateral foot used to be well above $550 per foot. Now in '25, we were around $500 a foot. How did we do that? Well, again, drilling longer laterals, multi-pad development and optimizing the fracs. So that's really where we're seeing the gains. As we talked on our Q1's earnings deck, we actually have a 15% reduction on spud to TD. And how did we gain that as of recently? Again, it's just the culture of the drilling department always non-soft relentless trying to find efficiencies, and we just optimize the BHA as we were drilling some of these horizontals and reduced the days by 15%. So those are just some examples.

Alex, as you look at bringing other zones into the capital program, should those kind of gains that you outlined be repeatable?

Absolutely. Again, I go back to just talking about look at the gains we had in our San Andres play over the years, right? We've got over 300 horizontals there. We saw nice gains there. But they were actually -- the Yocum San Andres is different than Andres -- San Andres. Well, not only have we seen gains on our own acreage, just write offset to our acreage, and we'll talk about CBP South, which is Crane and Nectar, offset operators have drilled over 200 horizontals recently and actually 100 horizontals alone within 1 or 2 miles of our acreage. So they proved efficiencies, and thus, we're trying to apply all the knowledge we've learned before from ours and also the offset operators, and we definitely believe that as we do multilaterals, co-development and longer laterals, it really drive that efficiency.

To your point about the graphs on Slide 17, should we also then expect that or should investors expect that the amount of production that you're able to add or capital dollar invested will grow as you transition some of these targets to horizontal zones?

Yes. That is the goal. The caveat is, obviously, as we talked in the earnings deck, and Paul just mentioned, we are having to invest in the infrastructure, right? So -- and we've been doing that in our San Andres plays, both in Yocum and Andrews. But as we transition and we'll talk more about CDP South, we've been investing, but there's multiple areas. And just to give you kind of order of magnitude there of our 90,000-plus acres our CDP South area is about 1/3 of it. So yes, we've invested in some of the dollars there. And so that will help transition to these longer laterals and more capital efficiency, but there is an investment upfront. However, over the last 2 to 3 years, not only is it that infrastructure investment that's leading to more barrels per capital spend essentially. But also we've been quietly actually spending a lot of leasing dollars. And so we've been able to benefit that in some of our plays up to the north. And now we're currently going to benefit in our place to the south. And so that also helps all that investment help create that capital efficiency. And then to kind of talk in layman's terms, let's just take, okay, we have two sections. We used to develop those TDP South vertical. In those two sections developed a 20-acre spacing was well over 60 vertical wells, right? Well, today, if you take 3 or 4 benches that we've improved on that same two sections, well, now you're drilling half of the wells horizontally and you're getting more production out of each well, yet you don't have the locations, the artificial lift equipment, the wellheads just because you cut really your total well count by half, and that's really...

The infrastructure and everything else. That's absolutely right.

Yes. So that's where the...

As you look at horizontal wells and the production profile of those types of wells versus some of these zones that you alluded to that might have been traditionally drilled in vertical wells. With a greater horizontal component of your Ring's production have an impact on the production profile of the overall company?

Yes. Well, let's first, let's just start getting a little bit educational because everyone has gotten used to the shale revolution right in the shale type production profiles. Our PDP base is 20% decline or so. So yes, as we transition to these horizontals was going to require less wells to add to the mix to basically maintain or slightly grow our production as we've been doing in years past. So overall, you're getting more PV10, more oil out of the horizontals. So our cash flow profile essentially is becoming more sustainable over time. And that's what investors have to look forward to as we're transitioning from vertical to horizontal drill.

Cash flow can also be generated by higher margins through lower operating costs. Alex, you and the team have shown a pretty good ability to lower operating costs out in the field. Can you share some specifics on what's been behind that? And then are there any real structural areas that you target over the next year or two? And as you look at horizontal drilling that you think also could continue to structurally improve the cost structure?

Yes, absolutely. Again, first of all, let's take a -- let's take a step back on structurally, we've been able to lower the cost over the last few years. We actually have a track record of that. If you go to Page 22 of our Q1 earnings deck, it really shows that track record. Not only have we reduced LOE, we've reduced our all-in cash cost on a dollar per BOE basis year-over-year. And one, we're excited for '26 and beyond because of all the things we just discussed. We should just continue -- we look forward to continuing that momentum. So you asked a little bit about like examples and just what have we done. So let's just talk holistic numbers. On Page 17, we've actually talked about what happened from '24 to '25. And we also talked about or you asked Paul a little bit earlier ago about like some of the acquisitions. Well, in '25, we had the Lime Rock acquisition. And so if you take -- compare '24 to '25 on an LOE standpoint, we had a $1.4 million a month in savings from '24 to '25 if we compare Lime Rock and in legacy versus our current asset base with Lime Rock on top of that now in '25. In addition, we've been able to continuously reduce the structural cost. And that's really because it mindset's a culture. We have a not a short-term type culture. We have a long-term built-to-last type culture. And so in Q1, if we heard our earnings call, we actually take those segments from $1.4 million to $1.7 million a month in savings or about a $2 per BOE basis. So we've been able to reduce that. And just how did we do that, just always looking at how to optimize and reduce your well failures, optimize our chemical program, building some automation to reroute some of the pumper routes those kind of things, it has a compounding effect at the time.

James, let's turn to you and talk a little bit about Ring's organic growth potential. As we've talked a little bit about earlier, producing property acquisitions have been an important role in building the asset base over the years. And in the -- as Alex alluded to, from a leasing standpoint, if you want to grow in the Permian Basin, largely it comes by trying to bolt on neighboring acreage. But vertical wells have dominated the Northwest Shelf and Central Basin platform for about 100 years. What do you think are the economic implications as you shift to more horizontal drilling? And which formations in the asset base might be the most amenable to more modern drilling and stimulation techniques?

Well, first of all, thanks again for hosting us today, Jeff. We really appreciate the opportunity as the guys have said, to tell our story. And it's a great question because where we're focused on the Central Basin platform in the Northwest shelf is the historic heart of the Permian Basin. And originally, probably for the first 80 years of that exploration and development, the Central Basin platform was the main event and the Northwest shelf with the world being a vertical exploiting conventional resources. And if you look at the map on Slide 5 of our investor deck, it shows the production on the Central Basin platform and the adjacent shale basins in the Delaware and the Midland to the East and the West. With the advent of horizontal wells with George Mitchell exploiting the Barnett and the explosion in horizontal activity for the last 20 years, the industry has migrated away from conventional assets into unconventional shale plays in the basins, Leaving these conventional assets, I'll say, largely abandoned or not the current focus of most of the companies. However, we're looking at them from the opportunity set has been a great target because conventional rock has much better reservoir properties. So our idea and our investment thesis is to apply horizontal technology, the development of methodology that's been developed and exploiting the shares for these last 20 years and convert what has largely been a vertical area into a horizontal development. The bottom line to that is, we have greater access to The Rock, greater reservoir contact and improved recoveries. And as Alex has said, for dollar spent, we have more barrels. So the capital efficiency, we get more production with fewer wells and create great present value for the company. And that shift to the horizontals has largely been step-wise for us because we're always focused on the maximum return. So we've been targeting the main historic reservoir on the Central Basin platform has been at San Andres. And we've been exploiting that efficiently in 4 main areas, as you can see in our investor deck. But from the activity of our vertical stack and fracs and the drilling of the neighbors, and you can see that explosion of activity on some of the maps in our deck, we now have a multi-bench opportunity set to include not just the San Andres and its various sub formations, the Judkins the Magnite but the deeper potential, the Gloria, the ClearForce which our Albany Wolfcamp, and the neighbors are even exploiting even potential in the Barnett, Woodford and the Devonian. And that really expands our opportunity set, our portfolio, but we're doing a pretty disciplined because we're always focused on returns. So -- we're looking for the rocks which have the best reservoir quality, best stickiness and the right pressure and fluid characteristics that give us the maximum return. So our program for '26 and '27 is focused on that. And we're developing increased understanding of these reservoirs and how they respond. And we'll have a lot of good, exciting things to tell you as the year goes on, both this year and early next year. So we're excited by using horizontal technology in the formations and areas that were present that we've acquired from the acquisitions that we've made. And as Alex says, we continue to learn and bolt-on organically to those positions to expand our footprint to drill longer laterals and be even more productive and capital efficient.

My understanding correctly, James, it basically Ring's asset base and the properties that you've acquired, you've been able to expand the organic growth potential of those assets by considering horizontal drilling in some of these stacked reservoirs and probably none of which was factored into the acquisition evaluation and the consideration that was paid. So it's essentially upside beyond and ultimately enhances the return and how that capital is deployed, is that reasonable?

Absolutely. That's been really interesting. The Permian is a very highly contested competitive area. And through the acquisitions, which were done mostly for the PDP and the opportunity set in the San Andres, with these being old established areas, they have lease rights to access the deeper potential. And we've been exploring those and exploiting those first with vertical frac and stacks in the South Central part of the area in Crane and Ector County. And we know from the production from those vertical wells from the tracer data that these additional targets, which weren't factored into the original acquisitions, they're now looking attractive, and we're testing those horizons with our program. So this is an opportunity set. It's exploring in the acreage we already own and is in our core areas to share in the infrastructure gains that Alex and Paul have said in terms of water handling, roads, power, gas takeaway. So it's a very efficient way of exploiting these deeper potentials that weren't factored into the original acquisition.

And if I may -- if I may add something here, James. And actually, when we're evaluating to 2 of those 3 acquisitions we've done over the last few years. One, we paid, like James said, like just really PDP and you got the upside for essentially free. But the other big part of that is that a lot of those acquisitions were in the hands of majors and a lot of those leases were done way back 50-plus years ago, so they held all deaths in their high net. And that's a really big difference maker. So most of our PDP South area has higher net. And so just it really boost your economics moving forward.

So higher net revenue interest, it gives bring a greater share of the production revenue coming off the lease, right, Alex?

That's exactly right.

James, last year, after being acquired the Lime Rock assets and when oil prices weakened in the second quarter, CapEx was lowered -- since you had the production. If you think about an activity level, has the pace of activity or maybe a little bit reduced pace of activity given your exploration teams, greater time to mature the ideas and develop the -- where you might want to test some of these other zones in the future when you start looking at some of the slides -- I have on Slide 8 where you show kind of the layer cake in the Basin platform?

Absolutely. It's interesting, it's been the tale of 2 years. We had Liberation Day last year, which took the air out of the oil prices and low -- and we weren't sure how low it would go and how long it would be, and we were told by IEA and lots of other places that there be a surplus. So we reduced our capital spending program to continue to pay down our debt which we did. And to, I guess, generate free cash flow, which we've done for 26 quarters. But just because we've -- at that time, we limited the capital spend but we kept our staff intact and thinking never stops. So it gave us the bandwidth to then look at our data, both from our data sets and the neighbors and look for when the world turned, which we didn't expect, but it turned on February 28 and prices come up that with increased oil prices, we have the benefit of potentially being able to test these deeper zones that we've had that period of time to assess which ones that have the most potential, where should we do them? As Alex said, where should we if you like, pre-invest in the infrastructure, the power, the water in order to test these zones, get them online and determine their ultimate economics. So we didn't waste the time. We used it wisely to construct where would we come out when the world turned and oil prices came up. So that's been a lesson. Having an exploration mindset never ends. The amount of budget you have to spend varies with oil price, and we're very conscious of that. And we're very encouraged by what we've seen in our portfolio and look forward to targeting it in the coming months.

So if you don't mind me jumping in there, James, and kind of put a little bit more color to your question, Jeff. Yes, when Liberation Day occurred, we cut back capital substantially, as you know, and we did that in preference of paying down debt and protecting the balance sheet, reducing risk for the shareholders. And so yes, it did prevent us from testing some of these zones that we tested a few zones last year. And we got started on this, but we would have spent more capital testing these other we'd be further along than where we are today. Because if you look at the work that the geoscience guys and all the engineering team that works for Alex, those guys and the land teams out there, well, they've been working really well together, identifying several opportunities in the playground where we are up and down the Center platform, the North West Shelf, and there's a lot of opportunities out there. We probably would be a little farther along, had deliberation that not occurred. But hey, it is what it is. We are where we are. But I'm really proud of what the teams have done. The geoscience, engineering land teams have done a great job of identifying opportunities, and there's a lot out there for us to continue to pursue in the very sandbox that we're playing today.

Well, I think what the capital that you did deploy last year, maybe leading into 2025, the wells that you drilled and the projects that you undertook actually performed well versus expectations and that supported Ring's production in the back half of the year. Is that the right way to think about it?

Absolutely. Yes, we focused last year on the highest return opportunities. We did sprinkle in some of these tests because we wanted start the process of converting to horizontals and get some experience under our belt. But it was a very successful year. And all of the tests, even though we haven't really talked about those yet because we're not ready to do that yet. We want to have some repeatability. We're testing some of these zones again this year. But all of the results we have in the last year were extremely encouraged and I was just saying it that way.

And to add to that, Paul, actually, it's on Slide 17 in our IR Deck, where you can see '23 and '24 that -- all of the horizontals together, our well performance has increased over time. And so -- we're just...

Alex or James, when Paul and the Board come to you and say, we need to construct a development program for the coming year. You have a big inventory with a wide variety of projects to look at that have different economics and different business cycles. How do you -- how do you prioritize which projects rise to the top and get funded in a budget process?

It's an iterative process, and that's a great question. Because we have a broad portfolio, which gives us a lot of opportunity, and we really try and take advantage of the competitive infrastructure and pre-investments that we've made to maximize the returns and that gets the party started while we assess other areas. So it's one of these -- they all have their own different pace, and they all have their own different outcome and all have their own characteristics. And we're able to -- we focus on the highest return projects and we invest across the portfolio and the plans and the outcomes don't always coincide. So it's good to have a portfolio of opportunities, and we're able to capitalize on that breadth and utilize the infrastructure that we've had, which is a key component of exploiting what we've got beneath us.

Sonu, let's talk about some of the finances. When you -- when Ring reported its first quarter numbers, I guess, 2 weeks ago now, production -- the full year production cost and CapEx guidance was reaffirmed with the guidance that was put out in early March. Pardon me, Paul touched on the recent equity offering. Can you just fill out any details regarding how the proceeds fit in the company's debt reduction and CapEx profile for 2026?

Yes, Jeff, and this is a really important question. And I think really important for our listeners to understand and our shareholders to kind of really understand what the use of proceeds are for this transaction. Our priority for the proceeds raised is really to strengthen our balance sheet. And with a clear focus to paying down the borrowings on our credit facility. So it's absolutely going to reduce leverage. It's going to take us to a position where to the end of this year, we were going to end somewhere at 2x leverage if we kind of ran a $75 oil case to where a pro forma for this deal, we're going to be well below 1.7. And if you start thinking about the run rate of our business and you think about where we are in Q4 annualized, our pro forma leverage for this deal will be close to 1.5x. So it dramatically changes the debt profile of this business on a go-forward basis. And as you think about our capital budget, the use of the proceeds wasn't intended to kind of change our development program. It absolutely was used to strengthen our company Ring and just provide us more optionality. So as you think about -- '27, the consensus figures has a lot of noise, I would say, in those figures. And this gives us a lot more optionality how we think about '27 and our free cash flow generation.

Paul mentioned the compounding impact on cash flow is reducing the interest cost associated with $60 million of RBL principal. Is the right way to think about that, that it increases free cash flow and, therefore, increases the ability to pay down debt at a faster rate than what you could have done without issuing that equity?

Absolutely. So on a dollar for dollar, every dollar we put in, there's less interest and we're having to pay on that debt that we're paying down. And with the proceeds raised, it's close to $5 million in interest savings that we're going to have annually when you can imagine the compounding effect of that year in and year out.

Is the -- or I guess, how will the offering proceeds affect the RBL availability in that -- as you look at your next redetermination, not to get ahead of the banks. But also, will the leverage ratio going -- declining have any impact on how Ring thinks about hedging?

So I think taking that that's kind of a multiple part question there. And so I think the bank meeting is an important kind of fact in -- I think it's also important to note, our relationship with our banking group is extremely strong. These are banks that have been supportive have been with us for a number of years. So I don't want people to associate the equity offering for some rationale because we had an upcoming bank meeting. We're a business that's been fully funded within cash flow for 6.5 going on 7 years. So that's 26-plus quarters of free cash flow generation. So there is no concerns coming into this bank meeting. This is absolutely a deal that we did to really strengthen our positioning. And we're really excited about the opportunities we have ahead of us. And I want to make sure our ops team has all the flexibility in their program going forward and us as a management team collectively agreed this is the right opportunity to strengthen our company. From a hedging standpoint, there's not going to be any immediate impact were required from our bank facility just to layer on some hedges. We're going to continue down that program. But as we delever and really by the back half of the year, it does open up the opportunity to have kind of different thoughts around that program.

Well, let's come back to a little bit where we started. The management team at Ring has been on a quest to create a sustainable Permian Basin growth platform since you and the rest of the team joined in 2020. Can you just share your perspective on the accomplishments to date and how Ring is positioned to appeal to a broader investor audience moving forward?

Yes. There's quite a bit there. If you look at -- if you go back to the last quarter of 2020, here we were. Vaccines were just starting to be rolled out. Ring had a leverage ratio that required waivers from the bank group. Our current credit facility has a limit of 3x, and we were 4x when I joined at the end of that period, we're still 3.6x still requiring a waiver. So balance sheet was a big issue. However, the core assets of the company had a tremendous amount of potential, and we knew that when we came on board. And so we got busy evaluating everything we create the liquidity to keep the company going. We invested in all the highest return opportunities. But if you look back in the history, like Sonu just said, we got 26 quarters in a row managing our cash flow, staying disciplined, allocating capital to the highest rate of return opportunities. The acquisitions we've made, every single one of them has created shareholder value on a per share debt-adjusted basis. And so we know how to do them. And so what have we done? What we complied when I came on board, we were about a little over -- just a little under 9,000 barrels a day. Today, we're essentially 20,000 barrels a day. When we took a reserve database of 75 million, 76 million barrels of reserves, and now we've got over 150 million barrels of reserves. Our present value has more than doubled. Our leverage ratio of 3.6%. And now today, we're about 2, but by the end of this year, even at $75, we're going to be well below $1.7 billion, probably closer to $1.5 billion or even perhaps lower than that if prices continue to sustain. And what have we done in that time, we've built a 10-plus year inventory of drilling opportunities that have superior economics to many of our peers and with reserve lives of over 20 years. So if you look at how we've done things, we've got a long track record of disciplined management of the assets that we were put in place to Stewart, and we've grown this company and double the size. If you look at the capital program that we have in 2026, I've never been more excited about a capital program than the one we have this year because the results and the fruit of this capital investment program truly has the best opportunity to position this company for growth, no matter what price environment and whether we're in a low price environment again or whether we're in a sustainably higher price environment, like I believe we will be. But if we were to exit this year and still be at 2x levered, we're still out of the market for some of these opportunities. We can't pursue the growth, even organic growth that we'd like to because the balance sheet just really needs more attention. And so what this equity raise did? It position this company for the options that are before us today that we believe are going to be really going to set us up for 2027 to 2028 for explosive growth, whether that's through organic growth. We'll have the ability to do that with the investments we're making this year and wells that we're testing and the transition we're making from vertical to horizontal going to a more capital-efficient program. But at the same time, if another acquisition presents itself that we can demonstrate per share accretion and on a debt-adjusted basis, keep our leverage ratios low and continue to make progress, improving the leverage ratio, well, then we'll have accomplished a lot. We've got 5 years of doing just that. We don't see any reason why that's going to change. And we really, really look forward to 2027, 2028, post this. Even after this Iranian conflict is resolved, we believe that all the forces that put in -- made all the incentives for lower oil prices, they've all been wiped out. All the on land and floating storage appears to be gone now. The world is still consuming oil at a faster rate than the world is delivering. And that's created an environment that we believe we will have sustainably higher prices for a longer period of time, and we just want to make sure that this company was positioned to take advantage of whatever those opportunities may be, and we believe we've done that. And so yes, that's really it.

Well, it will be interesting to watch the execution as you -- as we continue to delever the balance sheet and then further highlight some of these embedded growth opportunities in the stacked reservoirs you have across your asset base?

Yes. We really are as well. We've got an incredible team in place, starting with the geologists in the geoscience team that we have, the land team, the engineering team, the operating team out in the field. Right now for the -- it's been hard to develop the culture that seeks and pursues excellence for excellent sake, but we have that team in place now. All the things that held us back with the overhang in our stock in the past that kept our stock from performing, commensurate with our operating and financial performance, all of that is now behind us. And so -- and we're in a strong product environment, and we're ready to take advantage of that. And so we, too, are looking forward to that, Jeff. And so we really appreciate you providing us the opportunity to get the word out, help share some of the details on what we're thinking about and how we think about the future, where we're going to go, but we've got a great team here. And it's evidenced by these guys, that's why I wanted these guys to kind of join us in this fireside chat because I'm really proud of them on what they're able to do for our shareholders.

We will look forward to hosting another event in the coming months. Paul, Alex, James, Sonu, thank you so much for taking the time to join us today.

You're welcome.

Thanks very much, Jeff.

Thank you for joining us for today's fireside chat with Ring's senior leadership team. Our research on Ring Energy can be accessed through our website www.watertowerresearch.com. The views expressed in this fireside chat may not necessarily reflect the views of Water Tower Research LLC. They are provided for informational purposes only. This fireside chat may not be redistributed or reproduced without written consent of Water Tower Research and should not be considered research for a recommendation. WTR is an Investor Relations firm, not a licensed broker-dealer, market maker, investment bank, underwriter or investment adviser. Additional disclaimers can be found at our website, www.watertowerresearch.com. Once again, Paul, Alex, James, Sano, thank you so much for joining us today.

And welcome, and thank you for having us.