Ring Energy is a Permian explorer and producer. They recently closed the purchase of a private energy company with wells and land in the Permian. Q3 results included 1 month of combined company.
Q3 they earned 1.09eps but that included a large derivative profit from hedging of $42million. After eliminating hedging, adjusted net was similar to Q2 of .28eps.
Assuming they can maintain .28eps, they are trading for around fwd p/e of 3.
They are guiding for 2023 production of ~18,000 boepd versus 13,000boepd they produced in Q3. I expect improved results from the gradual expansion of production as the new year unfolds. +~35% seems reasonable.
.28 X 4 = 1.12 fwd eps. X 1.35= 1.51 fwd eps or about a 2 fwd p/e.
Opened a small position. Investors may be spooked by share issuance to fund purchase and waiting to see how combined company performs. Also the private company owners could sell REI to cash out and cause near term share price weakness.