Best Development And Exploration Through Rei Stock

Rei stock at https://www.webull.com/quote/amex-rei , Inc. (Ring) is an exploration and production company that is engaged in oil and natural gas acquisition, exploration, development, and production activities. The Company’sexploration and production interests are focused on Texas and Kansas. Its operations are all oil and gas exploration and production-related activities in the United States. The Company’s primary drilling operations target the Central Basin Platform in Andrews County and Gaines County, Texas, and the Delaware Basin in Reeves County and Culberson County, Texas.

Highlights of REI.

  • The ring has cut its CAPEX further to $26 million and has also reduced G&A costs.
  • This may allow it to generate $42 million in positive cash flow in 2020 at current strip prices.
  • Ring’s borrowing base may be reduced substantially though, with a reduction to $325 million plausible based on results from other companies.
  • With another borrowing base re-determination upcoming in November, Ring’s focus may be on minimizing CAPEX and paying down debt for the foreseeable future.
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Ring Energy (REI) is focusing heavily on debt reduction, having reduced its 2020 CAPEX budget by another $6 million and temporarily borrowing additional money from its credit facility to save $2+ million via the early payment of invoices.

These moves should allow it to generate a projected $46 million in positive cash flow in 2020 at current strip prices. It is likely to have at least a temporary borrowing base deficiency but may be able to pay down that deficiency over six installment payments.

Seaport Global downgraded Ring Energy’s stock from “buy” to “neutral” while slashing its price target from $20 to $12 per share. Driving the downgrade was Seaport Global’s findings after digging into some data obtained by DrillingInfo, which is an industry data provider. That information led Seaport to conclude that Ring Energy’s most recent well completions are underperforming older ones by 25%. In other words, instead of delivering the expected improvement in a good performance, the company’s latest techniques are taking a step backward.

Conclusion.

Rei stock should be able to generate a substantial amount of positive cash flow in 2020 since it is minimizing further CAPEX in 2020. This cash flow could help it reduce its credit facility borrowings to around $324 million by the end of 2020. However, based on results from other borrowing base re-determinations, Ring may see its borrowing base reduced significantly as well. If its borrowing base gets reduced to $325 million, that would leave it in the position of attempting to pay back the borrowing base deficiency over the next six months and then dealing with another borrowing base re-determination in November. If you want to know more stock news like ycbd stock , you can check at https://www.webull.com/quote/amex-ycbd .

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