Ring Energy is one of the more misunderstood small-cap E&Ps in the market today. In plain, english this means that Ring is being valued like a short duration shale company (picture a 100 meter sprint) but in reality REI is geared for a marathon in terms of pumping out low cost oil at $20 a barrel for the next 15+ years on existing inventory. This asset shows up in PV-10. PV-10 in simple terms, is Proven Developed Producing (PDP) and Proved Undeveloped (PUD), effectively known inventory. To calculate cash flows, the formula is current prices less extraction cost, transportation cost, taxes, and G&A, and these future cash flows are discounted at 10% to arrive at a net present value (NPV). This is extremely important for REI given long-duration, low-cost assets. At first glance, it screens like a typical leveraged Permian operator. But that characterization misses the core of the story: REI owns long-life, low-decline, high-margin conventional assets that behave fundamentally differently from short-cycle shale. That distinction drives a material valuation disconnect—one that becomes increasingly obvious as oil prices rise.

“Paul, as you know, I spent nearly 2 decades as a banker advising E&P companies and what became increasingly obvious to me over that time is that the U.S. shale model is maturing. Core inventory across the industry is being drilled up. Decline rates remain steep, and the market today is far more selective about which companies deserve long-term capital. Against that backdrop, Ring stands out. What initially caught my attention was the durability of the asset base. Ring operates conventional assets with shallow declines, long-life reserves and high margins, characteristics that are unique to ring and increasingly rare in today's E&P landscape.

A 20-plus year ROP ratio and more than 10 years of identified drilling inventory is something I don't think many other companies can say, especially in the small to mid-cap space. What also truly differentiated Ring for me was its consistency of execution. Ring has generated resilient free cash flow for 25 consecutive quarters through multiple commodity cycles. Over the last 3 years, Ring has organically grown reserves, not just replaced production. The company has also been active in M&A, successfully integrating multiple accretive acquisitions, all while simultaneously improving capital efficiency, lowering costs and reducing debt.

From a capital allocation standpoint, Ring is doing exactly what the public markets are asking for today, living within cash flow, reinvesting prudently, strengthening the company, building towards sustainable returns of capital, and maintaining optionality for growth. There are very few companies, especially at this scale that can demonstrate this level of discipline and repeatability. Looking ahead, I'm excited to be part of the team, and my focus as CFO will be straightforward: to protect the balance sheet, enhance free cash flow durability, strategically position us for growth, and help position Ring to ultimately return capital to stockholders from a position of strength. With our asset quality inventory depth and proven operating and financial discipline, I believe Ring is exceptionally well-positioned for the next phase of this industry.

At roughly $60–62 oil (SEC pricing), REI reports a PV-10 of approximately $1.3 billion against an enterprise value of roughly $700–750 million. That implies the market is valuing the company at ~0.5x PV-10, and closer to ~0.4x on a normalized basis.

In contrast, the broader peer group trades closer to ~1.4x EV / PV-10—meaning REI is valued at a ~65–70% discount to peers on the same asset metric.

In practical terms:

REI’s asset base stands apart in four key ways:

This combination produces durable, high-margin cash flow with limited reinvestment needs. Unlike shale operators that must constantly drill to maintain production, REI’s assets generate steady output with significantly lower capital intensity.

The result is a business that behaves less like a short-cycle driller and more like a:

The core of the opportunity lies in PV-10 sensitivity.

At $60 oil:
→ PV-10 ≈ $1.3B

At $75 oil (+25%):
→ PV-10 ≈ $1.8–2.0B (+40–60%)

At $90 oil (+50%):
→ PV-10 ≈ $2.6–3.2B (+100–150%)

This is not linear. Because REI’s cost structure is low, incremental oil price increases disproportionately expand margins, and because reserves are long-lived, more years benefit from higher pricing.

If oil approaches $90 and PV-10 reaches ~$3B, applying even a discounted peer multiple of 0.8–1.0x PV-10 implies:

→ $2.4–3.0B enterprise value

Compared to today’s ~$0.7B EV, that represents:

At $75 oil, the opportunity still supports 2–3x upside.

The market is pricing REI like:

But the reality is:

This misclassification is the source of the discount—especially when combined with PV-10 calculated off lower oil prices.

Apply discount vs peers (1.4x EV/PV-10)

Small-cap E&P range: 3.5x–5x

Apply 15–25% yield (higher = conservative)

Below is Industry PV-10/EV = Proven Developed Producing+ Proved Undeveloped oil inventory future cash flows discounted at 10%/Enterprise value (net debt + market cap)