Research from Water Tower Research, Water Tower Research

Water Tower Research

Research from Water Tower Research

Water Tower Research is a leading equity research firm that provides research on micro, small and mid cap companies.

Water Tower Research was founded by Wall Street veterans after witnessing a fundamental shift in the investment research industry with the result being a declining knowledge base among investors, a lack of awareness and a shrinking pool of fundamental research being conducted on companies across the small-cap and micro-cap spectrum. The same issues are now increasingly occurring in the mid-cap space. This sea change within the investment community is impacting not only the companies themselves but also current shareholders and potential investors. With significantly less active sell-side sponsorship by Wall Street, a substantial information gap has developed between companies and various constituents in the financial community. The net result is fewer channels for insight and information to flow between companies and investors.

Equity Research Firm

Equity Bottom-Up

<ul><li>Acquisitions are expected to remain a centerpiece of management’s three-pronged strategy to increase scale in the asset base, reduce outstanding debt, and ultimately position the company to return cash to shareholders.</li><li>The Stronghold acquisition in 3Q22, followed by the Founders acquisition in 3Q23, added operational scale and inventory depth on the southern portion of the Central Basin Platform (CBP).</li><li>Together with Ring’s Northwest Shelf (NWS) assets, the inventory provides a diverse set of horizontal and vertical development opportunities.</li></ul>

Acquisitions are expected to remain a centerpiece of management’s three-pronged strategy to increase scale in the asset base, reduce outstanding debt, and ultimately position the company to return cash to shareholders.The Stronghold acquisition in 3Q22, followed by the Founders acquisition in 3Q23, added operational scale and inventory depth on the southern portion of the Central Basin Platform (CBP).Together with Ring’s Northwest Shelf (NWS) assets, the inventory provides a diverse set of horizontal and vertical development opportunities.

Ring Energy, Inc. - Scaling Business Through Acquisitions & Development

<ul><li>Ring’s 4Q23 production averaged ~19,400 BOE/d, near the high end of management’s 18,900-19,500 BOE/d guidance range.</li><li>Average production increased 11% from 3Q23, reflecting the full-quarter inclusion of  volumes acquired in the Founders acquisition, which closed in August 2023, and from volumes added from the completion of the 2023 development program in the quarter.</li><li>Management expects 1Q24 production to average 18,000-18,500 BOE/d. 1Q24 volumes were adversely affected by winter weather disruptions in January, which deferred ~1,900 BOE/d for 10 days and natural declines from wells completed during 2H23.</li></ul>

Ring’s 4Q23 production averaged ~19,400 BOE/d, near the high end of management’s 18,900-19,500 BOE/d guidance range.Average production increased 11% from 3Q23, reflecting the full-quarter inclusion of  volumes acquired in the Founders acquisition, which closed in August 2023, and from volumes added from the completion of the 2023 development program in the quarter.Management expects 1Q24 production to average 18,000-18,500 BOE/d. 1Q24 volumes were adversely affected by winter weather disruptions in January, which deferred ~1,900 BOE/d for 10 days and natural declines from wells completed during 2H23.

<ul><li>Ring is pursuing a strategy to position the company to ultimately return capital to shareholders.</li><li>Execution involves accretive acquisitions that generate free cash flow, which can be applied to the balance sheet to reduce leverage.</li><li>Please see our June 22, 2023, Management Series Report “Conventional Path to Shareholder Value” for discussion of the strategy.</li></ul>

Ring is pursuing a strategy to position the company to ultimately return capital to shareholders.Execution involves accretive acquisitions that generate free cash flow, which can be applied to the balance sheet to reduce leverage.Please see our June 22, 2023, Management Series Report “Conventional Path to Shareholder Value” for discussion of the strategy.

Ring Energy Inc. - Expanding Central Basin Platform Core Area

Stronghold Assets Add Permian Scale and Free Cash Flow Generation Potential

Technical Analyst, Vermilion Research

Joe Jasper

Technical Analyst

Technical and Quantitative Research

Vermilion Research

Vermilion’s objective is to deliver timely, actionable, and unique technical research to professional investors through the application of our various technical indicators.

Our research strategists seek to highlight securities which we believe are at major inflection points, based on our various technical and quantitative indicators, and offer asymmetric risk/return profiles. Our unique research methodology, centered on relative strength, enables our strategists to deliver superior investment recommendations.

Our process begins by organizing the universe of actively traded stocks into discrete sectors, then into industry groups. We then apply our technical and quantitative tools to identify developing price trends. Once attractive trends are identified within a selected sector or group, we screen for individual stocks which we believe offer the best risk/reward profile. We provide a historical perspective that often reveals, through our long-term charts, how price patterns often repeat themselves over time.

Technical Analysis

<p>The weight of the evidence remains mixed yet constructive overall and suggests pullbacks to the 4000-4040 range on the S&amp;P 500 would be nothing more than a buying opportunity. Therefore, we continue to recommend adding exposure to cyclical value areas (Energy, Financials, Materials, Manufacturing, and Transportation) on pullbacks. Below we explain why we believe value’s outperformance is in its early innings, and the basis for our overall constructive outlook.</p>

The weight of the evidence remains mixed yet constructive overall and suggests pullbacks to the 4000-4040 range on the S&amp;P 500 would be nothing more than a buying opportunity. Therefore, we continue to recommend adding exposure to cyclical value areas (Energy, Financials, Materials, Manufacturing, and Transportation) on pullbacks. Below we explain why we believe value’s outperformance is in its early innings, and the basis for our overall constructive outlook.

U.S. Equity Strategy: Value Is Just Getting Going; S&P 500, Micro-Caps At Support

United States

Ring Energy Inc is an independent oil and gas exploration company with headquarters in Midland, Texas. The Company's business strategy is focused on the exploration, development and acquisition of oil and natural gas properties in the Permian and Mid-Continent regions of the United States.

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Ring Energy Inc (REI US)

Ring Energy, Inc. - Scaling Business Through Acquisitions & Development

Acquisitions are expected to remain a centerpiece of management’s three-pronged strategy to increase scale in the asset base, reduce outstanding debt

Water Tower Research

Ring Energy, Inc. - Estimate Update

Ring’s 4Q23 production averaged ~19,400 BOE/d, near the high end of management’s 18,900-19,500 BOE/d guidance range. Average production increased...

Water Tower Research

Ring Energy Inc. - Expanding Central Basin Platform Core Area

Execution involves accretive acquisitions that generate free cash flow, which can be applied to the balance sheet to reduce leverage.

Water Tower Research

Stronghold Assets Add Permian Scale and Free Cash Flow Generation Potential

KEY POINTS On August 31, 2022, Ring closed the $465-million acquisition of assets from Stronghold Energy II Operating, LLC and Stronghold Energy...

Water Tower Research

U.S. Equity Strategy: Value Is Just Getting Going; S&P 500, Micro-Caps At Support

The weight of the evidence suggests pullbacks to 4000-4040 on the S&P 500 would be nothing more than a buying opportunity. We also explain why we...

Vermilion Research

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