Ring Energy Shifts 2026 Drilling Toward Longer Laterals

The Tip Desk · October 17, 2026 · 4 min read

Second-half oil guidance midpoint rose about 2% to 13,000–13,950 barrels a day as the company lifted capital spending and issued stock.

Ring Energy, Inc. (REI), a Permian Basin oil and gas producer, said wells longer than 1.5 miles are expected to account for about 70% of planned 2026 drilling, versus about 42% in its original plan, after encouraging early results from extended-reach laterals.

The company drilled three 2-mile horizontal wells in Crane County in the second quarter, the first laterals of that length in an area historically developed with vertical wells. All four of those wells, including a saltwater disposal well, are expected to be completed in the third quarter.

That shift is the quarter’s defining operational turn. Ring had spent the first quarter accelerating infrastructure to unlock longer-lateral inventory and had paused debt reduction to capture attractively priced opportunities. In the second quarter it completed an equity offering that raised $64.8 million from the issuance of common stock, and it said the expanded drilling program would be funded primarily through operating cash flow.

Oil sales were 12,683 barrels a day, up 3% from 12,276 barrels a day in the first quarter, and total volumes were 19,990 barrels of oil equivalent a day. Both figures were within guidance. Realized crude oil price rose to $95.45 a barrel from $68.97 a barrel in the first quarter. The all-product realized price was $57.55 a barrel of oil equivalent.

Oil, natural gas and natural gas liquids revenues increased to $104.7 million from $73.7 million. Adjusted EBITDA rose 42% to $54.5 million from $38.3 million in the first quarter. Adjusted net income was $24.0 million, or $0.10 a share.

GAAP net income swung to a $64.8 million profit, or $0.27 a share, from a $220.6 million loss in the first quarter. The profit included a $42.2 million unrealized mark-to-market gain on commodity derivative contracts. The first-quarter loss had included a $162.1 million non-cash ceiling test impairment and a $77.0 million unrealized derivative loss.

Lease operating expense fell to $10.12 a barrel of oil equivalent, near the low end of guidance. Depreciation, depletion and amortization declined to $11.06 a barrel of oil equivalent. Capital expenditures increased to $43.2 million from $34.5 million. Adjusted free cash flow was $4.4 million. Net cash provided by operating activities was $40.8 million. The company remained cash flow positive for more than six consecutive years and generated positive adjusted free cash flow for the 27th straight quarter.

Revolving credit borrowings were reduced by $66 million to $360 million at June 30, 2026, reversing the $6 million increase in the first quarter. Liquidity rose to approximately $226.1 million from $160.0 million at March 31. The company intends to resume debt reduction, dependent on market conditions and the timing of capital spending.

Second-half 2026 oil production guidance is 13,000 to 13,950 barrels a day, with the midpoint approximately 2% above prior guidance. Second-half lease operating expense guidance is $10.00 to $10.60 a barrel of oil equivalent. Capital spending for the second half is $80 million to $100 million, with 10 to 14 new laterals longer than 1.5 miles planned.

Initial 2027 guidance targets production growth of approximately 10% over full-year 2026, lease operating expense per barrel of oil equivalent approximately 1% lower than full-year 2026, and capital expenditures approximately 10% lower than full-year 2026. Full-year 2027 oil sales volumes are guided at 13,550 to 14,650 barrels a day and total volumes at 21,500 to 23,500 barrels of oil equivalent a day. Capital spending for 2027 is $135 million to $165 million, with 20 to 30 new laterals longer than 1.5 miles.

McKinney said the equity offering gave the company balance-sheet capacity to fund the acceleration of its development transition without losing focus on decreasing its leverage ratio, and that leverage is expected to trend toward a 1.25x target as the investment cycle completes. The company continues to evaluate select non-core assets that do not fit long-term development plans, with any proceeds directed toward further debt reduction.