Ring Energy has entered into an agreement to acquire the Central Basin Platform (“CBP”) assets of Lime Rock Resources IV for $100 million, subject to customary closing adjustments. The purchase price is comprised of $80 million of upfront cash consideration, a $10 million deferred cash payment due nine months after closing, and up to 7.4 million shares of Ring common stock. The transaction has an effective date of October 1, 2024, and is expected to close by the end of the first quarter of 2025.

Lime Rock’s CBP acreage is in Andrews County, Texas, where the majority of the acreage directly offsets Ring’s core Shafter Lake operations, and the remaining acreage is prospective for multiple horizontal targets and exposes the Company to new active plays. The transaction represents another opportunity for the Company to seamlessly integrate strategic, high-quality assets with Ring’s existing operations and create shareholder value through improved operations and synergy capture. The Lime Rock position has been a key target for Ring as the Company has historically sought to consolidate producing assets in core counties on the CBP defined by shallow declines, high margin production and undeveloped inventory that immediately competes for capital. Additionally, these assets add significant near-term opportunities for field level optimization and cost savings that are core competencies of Ring’s operating team.   

Transaction Highlights

• Highly Accretive CBP Acquisition: Accretive to key Ring per share financial and operating metrics, and attractively valued at less than 85% of Proved Developed (“PD”) PV-10(1,2);
• Increased Scale and Operational Synergies: Expands legacy CBP footprint with seamless integration and identified cost reduction opportunities;
• Meaningful Adjusted Free Cash Flow (“AFCF”)(1) Generation: Higher AFCF, shallow decline and reduced reinvestment rate accelerates debt reduction;
• Strengthens High-Return Inventory Portfolio: Improves inventory of proven drilling locations with superior economics in active development areas; and
• Creates a Stronger and More Resilient Company: Solidifies position as a leading conventional Permian consolidator while strengthening the operational and financial base.

Mr. Paul D. McKinney, Chairman of the Board and Chief Executive Officer, commented, 
“This is a unique opportunity to capture high-quality, oil-weighted assets that generate significant free cash flow in a privately negotiated transaction. Today’s announcement is another example of our proven strategy to create value for our shareholders through accretive M&A. This acquisition not only increases our scale, but it also enhances our portfolio of high-return drilling locations and accelerates the Company’s ability to pay down debt. We look forward to quickly integrating the assets into our existing operations and applying our extensive expertise to optimally develop the inventory of horizontal targets afforded by the transaction.”

Mr. McKinney continued, 
“For the Lime Rock transaction, we expect to run the same playbook as our highly successful Founders’ acquisition announced in 2023, which has outperformed nearly all our initial underwriting assumptions. Since closing, Ring has increased the Founders’ production base by greater than 40%, lowered the Founders’ per Boe lifting costs by approximately 20%, and reduced our Company’s debt balance through free cash flow generation to more than cover the cash purchase price. We plan to achieve similar success on the Lime Rock assets. Our team has a proven M&A track record as Lime Rock will mark Ring’s fourth acquisition since 2019, totaling approximately $940 million of assets. We believe the benefits of consolidation are compelling when structured appropriately, and we strongly view this as a value-enhancing transaction for Ring shareholders that will better position the Company for future opportunities and long-term success.”

Asset Highlights

• ~17,700 net acres (100% HBP) contiguous to Ring’s existing footprint;
• 2,300 boe/d (>80% Oil) of low-decline average Q3 2024 net production from ~101 gross wells;
• $120 million of oil-weighted PD PV-101,2 based on February 19, 2025 NYMEX strip pricing;
• >40 gross locations that immediately compete for capital; and
• $34 million of 2025E Adjusted EBITDA(1) implies an attractive valuation for shareholders.

Transaction Consideration

The purchase price of the acquisition is $100 million, subject to customary closing adjustments. Consideration consists of cash and up to 7.4 million shares of Ring common stock based on Ring’s 10-day volume weighted average stock price of $1.3534 per common share as of February 24, 2025. The upfront cash consideration is expected to be funded with cash on hand and borrowings under Ring’s existing credit facility.

(1) Represents a non-GAAP financial measure that should not be considered a substitute for any GAAP measure.
(2) Proved reserves determined by internal management estimates based on NYMEX strip pricing as of February 19, 2025.

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