The Lime Rock deal is Ring’s fourth acquisition since 2019 for a total of $940 million in assets. (Source: MacroEcon/Shutterstock)
Ring Energy Inc. is bolting on Lime Rock Resources IV LP’s Central Basin Platform assets for $100 million, the E&P announced Feb. 26.
The majority of the assets are located in Andrews County, Texas, next to Ring’s core Shafter Lake operations in the Permian Basin. The remainder exposes Ring to new active plays, the company said in the deal’s announcement.
Approximately 17,700 net acres, 100% HBP, are contiguous to Ring’s existing footprint and had a low-decline net production average of 2,300 boe/d at more than 80% oil for the third quarter of 2024 from about 101 gross wells.
Ring will pay $80 million in cash upfront and another $10 million nine months after closing, plus another 7.4 million shares of Ring common stock based on Ring’s 10-day average stock price of $1.35 per common share as of Feb. 24.
The upfront cash will be paid with cash on hand and with borrowings under Ring’s existing credit facility.
The transaction holds near-term opportunities for field optimization and cost savings, which will allow Ring to consolidate producing assets and pay down debt, Ring said in the press release.
"This is a unique opportunity to capture high-quality, oil-weighted assets that generate significant free cash flow in a privately negotiated transaction,” Ring Chairman and CEO Paul D. McKinney said. “Today's announcement is another example of our proven strategy to create value for our shareholders through accretive M&A."
The Lime Rock deal is Ring’s fourth acquisition since 2019 for a total of $940 million in assets. Ring Energy closed on a $75 million deal for Permian assets from Founders Oil & Gas IV LLC in 2023.
“For the Lime Rock transaction, we expect to run the same playbook as our highly successful Founders' acquisition announced in 2023, which has outperformed nearly all our initial underwriting assumptions,” McKinney said. “Since closing, Ring has increased the Founders' production base by greater than 40%, lowered the Founders' per Boe lifting costs by approximately 20%, and reduced our company's debt balance through free cash flow generation to more than cover the cash purchase price.”
Greenhill, a Mizuho affiliate, acted as sole financial adviser to Ring and Jones & Keller served as legal counsel. Truist Securities served as financial adviser to Lime Rock Resources and Kirkland & Ellis LLP served as legal counsel.
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