Ring Energy (NYSEAMERICAN:REI) Chairman and Chief Executive Officer Paul McKinney outlined the company’s strategy to expand oil production and improve capital efficiency through longer horizontal drilling programs in the Central Basin Platform and southern shelf areas of the Permian Basin.
Speaking at an EnerCom event, McKinney said the company has grown from producing less than 9,000 barrels per day when he joined in the fourth quarter of 2020 to more than 20,000 barrels per day currently. He said Ring has also strengthened its balance sheet while completing acquisitions including Stronghold Energy in 2022 and Lime Rock in 2025.
Focus on Conventional Permian Reservoirs
According to McKinney, the Central Basin Platform and shelf areas have historically produced nearly 20 billion barrels of oil, compared with about 12.5 billion barrels for the Midland Basin and just under 10 billion barrels for the Delaware Basin. Ring estimates that more than 15 billion barrels remain recoverable in conventional reservoirs on the Central Basin Platform.
He said conventional reservoirs generally have higher porosity and permeability than shale formations, contributing to shallower production declines and longer-producing asset lives. Ring believes advances in horizontal drilling and multi-stage fracturing technologies can now be applied more effectively to these formations.
“We believe that we are in the heart of the Permian,” McKinney said, describing the company’s acreage position across Yoakum, Gaines, Andrews and Crane counties.
Crane County Inventory Expansion
McKinney highlighted Crane County as an area of increasing activity following Ring’s Stronghold acquisition. The acquired acreage included wells previously drilled by Devon Energy in 2010 and 2011, though he said the technology at that time did not generate returns meeting Devon’s thresholds.
Ring has been testing formations in the area for roughly a year and a half, McKinney said, and is now pursuing multi-bench, longer-lateral horizontal development. The company identified more than 200 high-return horizontal drilling locations in Crane County during the past year, he said.
The company had 14 horizontal wells booked as proved undeveloped reserves at year-end 2025, according to McKinney. He said more than 70% of Ring’s inventory is now associated with the expanded location count in the area.
McKinney said Ring’s analysis indicated that moving from vertical to horizontal development increased PV-10 values by 65% and oil recovery by 180%. He also cited nearby activity by private operator Blackbeard Operating, whose acreage offsets Ring’s position, as evidence of the potential for horizontal development in the area.
Higher 2026 Capital Program, 2027 Growth Outlook
Ring revised its 2026 capital program to approximately $160 million to $165 million from an initial plan of about $115 million, McKinney said. The larger program reflects a greater focus on horizontal wells, longer laterals and infrastructure.
- The company shifted from expecting 42% of wells to use shorter laterals to planning for 70% longer-lateral development.
- Vertical wells are now expected to represent about 4% of the program, down from an earlier expectation of roughly 20%.
- Infrastructure spending is expected to account for 14% of capital expenditures, up from 10% in the original plan.
For 2027, McKinney said Ring expects to deliver about 10% production growth while spending 10% less capital than in 2026. He said the company also expects lease operating expenses to decline by another 1% to 2% from 2026 levels.
McKinney said the projected improvements reflect greater capital efficiency from longer laterals, multi-zone development and a reduced reliance on vertical drilling. He said the company expects this approach to support higher adjusted free cash flow and earnings under varying oil-price scenarios.
Balance Sheet and Hedging Strategy
Financial strength remains Ring’s first capital-allocation priority, McKinney said. He identified reducing the company’s leverage ratio below 1.25 times as significant because of its implications under Ring’s credit facility.
The company entered 2026 expecting potentially lower oil prices and used hedges intended to capture $60 per barrel at the wellhead, McKinney said. After oil prices rose amid conflict in the Persian Gulf, Ring shifted toward wider collars that maintain downside protection while allowing more exposure to higher commodity prices.
McKinney said Ring was roughly 30% unhedged for 2026. For 2027, he said 61% of first-half production and 64% of production overall was unhedged as of the presentation. The company expects to continue meeting credit-facility requirements to hedge about 50% of production over the first 24 months while favoring wider collars where available.
McKinney said Ring views itself as the third-largest producer on the Central Basin Platform and sees an opportunity to act as a consolidator in the region. He said the company has built more than 10 years of drilling inventory at current development rates and believes its existing acreage, infrastructure access and higher net revenue interests can support continued organic growth.
About Ring Energy (NYSEAMERICAN:REI)
Ring Energy, Inc is an independent oil and natural gas exploration and production company focused on the development, acquisition and operation of upstream assets in the United States. Headquartered in Odessa, Texas, the company concentrates its activities on onshore hydrocarbon plays, where it seeks to optimize production through technical innovation, cost management and disciplined capital allocation. Ring Energy trades on the NYSE American under the ticker symbol REI.
The company’s core operations are centered in the Permian Basin, one of North America’s most prolific oil-producing regions.
