Oil and gas exploration and production company Ring Energy Inc. has initiated the next phase of its Northwest Shelf (NWS) drilling program. Under the program, it has started 3 more wells in its highest rate-of-return projects that are located at Yoakum County in Texas. Shares of the company were down about 2.2% in the pre-market trading.
Ring Energy (REI) Chairman of the Board and Chief Executive Officer, Paul D. McKinney said, “We look forward to drilling and bringing this next tranche of three wells online in the second quarter. Our 2021 development program is focussed on our highest risk-adjusted return opportunities, which is squarely in line with our stated objective to pursue operational excellence by steadying production levels and controlling costs while pursuing rigorous capital discipline.”
McKinney also noted that the severe storm in February impacted the company’s production with a more than 60% shut in and complete restoration taking 2 weeks. Further guidance on 1Q production levels is expected by the end of April. (See Ring Energy stock analysis on TipRanks)
Under the NWS program, the company already brought 4 wells online in 1Q. These wells produced a cumulative 37,550 gross barrels of oil equivalent in March.
Of the three new wells, drilling of the first is complete and is expected to start production by the end of April. The second well has drilling operations underway and drilling operations on the third are expected to begin in late April. The latter two wells are expected to come online before the end of May.
Last month, Alliance Global Partners analyst Jeff Campbell upgraded the stock to Buy from Hold and set a $3.48 price target (54.7% upside potential).
Campbell noted that small operators like Ring Energy will “fly under activist’s radar and stand to benefit from any investor underestimation of future oil and gas demand.”
Shares have gained about 265.3% over the past year.
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