REI - Ring Energy: Value Is Still In The Doghouse

2024-01-28 19:26:37 ET

Summary

• Ring Energy is focused on improving its balance sheet through acquisitions, increasing oil production, and reworks.
• The market's negative attitude towards growth may keep commodity prices volatile but also allow time for companies to repair their balance sheets.
• The recent acquisitions have allowed a maintained debt ratio to show improvement because commodity prices are lower.
• The market wants a debt ratio of 1.0 currently with an improvement to a better debt ratio under more conservative assumptions.
• Cash flow needs to be generous as well.

As Ring Energy ( REI ) management notes in the current presentation, the value strategy has little to no importance in the calculations of Mr. Market. However, management is working to get the debt ratio to acceptable levels. The acquisitions are lowering the debt ratio and commodity prices are staying (so far) in a reasonably helpful range. As I noted before, management may need to pick up the acquisition pace. But a continuation of the current strategy of opportunistic acquisitions and repaying debt should allow the stock price to recover in the future....

For further details see: