Cover
Cover - USD ($) | 12 Months Ended | |||
Dec. 31, 2022 | Dec. 31, 2021 | Mar. 09, 2023 | Jun. 30, 2022 | |
Cover [Abstract] | ||||
Document Type | 10-K | |||
Document Annual Report | true | |||
Document Period End Date | Dec. 31, 2022 | |||
Document Transition Report | false | |||
Entity File Number | 001-36057 | |||
Entity Registrant Name | Ring Energy, Inc. | |||
Entity Incorporation, State or Country Code | NV | |||
Entity Tax Identification Number | 90-0406406 | |||
Entity Address, Address Line One | 1725 Hughes Landing Blvd., | |||
Entity Address, Address Line Two | Suite 900 | |||
Entity Address, City or Town | The Woodlands | |||
Entity Address, State or Province | TX | |||
Entity Address, Postal Zip Code | 77380 | |||
City Area Code | 281 | |||
Local Phone Number | 397-3699 | |||
Title of 12(b) Security | Common Stock, par value $0.001 | |||
Trading Symbol | REI | |||
Security Exchange Name | NYSEAMER | |||
Entity Well-known Seasoned Issuer | No | |||
Entity Voluntary Filers | No | |||
Entity Current Reporting Status | Yes | |||
Entity Interactive Data Current | Yes | |||
Entity Filer Category | Accelerated Filer | |||
Entity Small Business | false | |||
Entity Emerging Growth Company | false | |||
ICFR Auditor Attestation Flag | true | |||
Entity Shell Company | false | |||
Auditor Name | Grant Thornton LLP | Eide Bailly LLP | ||
Auditor Firm ID | 248 | 286 | ||
Entity Central Index Key | 0001384195 | |||
Current Fiscal Year End Date | --12-31 | |||
Document Fiscal Year Focus | 2022 | |||
Document Fiscal Period Focus | FY | |||
Amendment Flag | false | |||
Entity Common Stock, Shares Outstanding | 180,627,484 | |||
Entity Public Float | $ 281,212,950 | |||
Documents Incorporated by Reference | The information required by Part III of this Report, to the extent not set forth herein, is incorporated herein by reference from the registrant’s definitive proxy statement relating to the Annual Meeting of Stockholders to be held in 2023, which definitive proxy statement shall be filed with the Securities and Exchange Commission within 120 days after the end of the fiscal year to which this Report relates. |
Audit Information
Audit Information | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Audit Information [Abstract] | ||
Auditor Name | Grant Thornton LLP | Eide Bailly LLP |
Auditor Firm ID | 248 | 286 |
Auditor Location | Houston, Texas | Denver, Colorado |
BALANCE SHEETS
BALANCE SHEETS - USD ($) | Dec. 31, 2022 | Dec. 31, 2021 |
Current Assets | ||
Cash and cash equivalents | $ 3,712,526 | $ 2,408,316 |
Accounts receivable | 42,448,719 | 24,026,807 |
Joint interest billing receivable | 983,802 | 2,433,811 |
Derivative assets | 4,669,162 | 0 |
Inventory | 9,250,717 | 0 |
Prepaid expenses and other assets | 2,101,538 | 938,029 |
Total Current Assets | 63,166,464 | 29,806,963 |
Properties and Equipment | ||
Oil and natural gas properties, full cost method | 1,463,838,595 | 883,844,745 |
Financing lease asset subject to depreciation | 3,019,476 | 1,422,487 |
Fixed assets subject to depreciation | 3,147,125 | 2,089,722 |
Total Properties and Equipment | 1,470,005,196 | 887,356,954 |
Accumulated depreciation, depletion and amortization | (289,935,259) | (235,997,307) |
Net Properties and Equipment | 1,180,069,937 | 651,359,647 |
Operating lease asset | 1,735,013 | 1,277,253 |
Derivative assets | 6,129,410 | 0 |
Deferred financing costs | 17,898,973 | 1,713,466 |
Total Assets | 1,268,999,797 | 684,157,329 |
Current Liabilities | ||
Accounts payable | 111,398,268 | 46,233,452 |
Financing lease liability | 709,653 | 316,514 |
Operating lease liability | 398,362 | 290,766 |
Derivative liabilities | 13,345,619 | 29,241,588 |
Notes payable | 499,880 | 586,410 |
Deferred cash payment | 14,807,276 | 0 |
Total Current Liabilities | 141,159,058 | 76,668,730 |
Non-current Liabilities | ||
Deferred income taxes | 8,499,016 | 90,292 |
Revolving line of credit | 415,000,000 | 290,000,000 |
Financing lease liability, less current portion | 1,052,479 | 343,727 |
Operating lease liability, less current portion | 1,473,897 | 1,138,319 |
Derivative liabilities | 10,485,650 | 0 |
Asset retirement obligations | 30,226,306 | 15,292,054 |
Total Liabilities | 607,896,406 | 383,533,122 |
Commitments and contingencies | ||
Stockholders' Equity | ||
Preferred stock - $0.001 par value; 50,000,000 shares authorized; no shares issued or outstanding | 0 | 0 |
Common stock - $0.001 par value; 225,000,000 shares authorized; 175,530,212 shares and 100,192,562 shares issued and outstanding, respectively | 175,530 | 100,193 |
Additional paid-in capital | 775,241,114 | 553,472,292 |
Accumulated deficit | (114,313,253) | (252,948,278) |
Total Stockholders’ Equity | 661,103,391 | 300,624,207 |
Total Liabilities and Stockholders' Equity | $ 1,268,999,797 | $ 684,157,329 |
BALANCE SHEETS (Parenthetical)
BALANCE SHEETS (Parenthetical) - $ / shares | Dec. 31, 2022 | Dec. 31, 2021 |
Statement of Financial Position [Abstract] | ||
Preferred stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Preferred stock, shares authorized (in shares) | 50,000,000 | 50,000,000 |
Preferred stock, shares issued (in shares) | 0 | 0 |
Preferred stock, shares outstanding (in shares) | 0 | 0 |
Common stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Common stock, shares authorized (in shares) | 225,000,000 | 225,000,000 |
Common stock, shares, issued (in shares) | 175,530,212 | 100,192,562 |
Common stock, shares, outstanding (in shares) | 175,530,212 | 100,192,562 |
STATEMENTS OF OPERATIONS
STATEMENTS OF OPERATIONS - USD ($) | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Income Statement [Abstract] | |||
Oil, Natural Gas, and Natural Gas Liquids Revenues | $ 347,249,537 | $ 196,305,966 | $ 113,025,138 |
Costs and Operating Expenses | |||
Lease operating expenses | 47,695,351 | 30,312,399 | 29,753,413 |
Gathering, transportation and processing costs | 1,830,024 | 4,333,232 | 4,090,238 |
Ad valorem taxes | 4,670,617 | 2,276,463 | 3,125,222 |
Oil and natural gas production taxes | 17,125,982 | 9,123,420 | 5,228,090 |
Depreciation, depletion and amortization | 55,740,767 | 37,167,967 | 43,010,660 |
Ceiling test impairment | 0 | 0 | 277,501,943 |
Asset retirement obligation accretion | 983,432 | 744,045 | 906,616 |
Operating lease expense | 363,908 | 523,487 | 1,196,372 |
General and administrative expense | 27,095,323 | 16,068,105 | 16,874,050 |
Total Costs and Operating Expenses | 155,505,404 | 100,549,118 | 381,686,604 |
Income (Loss) from Operations | 191,744,133 | 95,756,848 | (268,661,466) |
Other Income (Expense) | |||
Interest income | 4 | 1 | 8 |
Interest (expense) | (23,167,729) | (14,490,474) | (17,617,614) |
Gain (loss) on derivative contracts | (21,532,659) | (77,853,141) | 21,366,068 |
Deposit forfeiture income | 0 | 0 | 5,500,000 |
Net Other Income (Expense) | (44,700,384) | (92,343,614) | 9,248,462 |
Income (Loss) Before Provision for Income Taxes | 147,043,749 | 3,413,234 | (259,413,004) |
Benefit from (Provision for) Income Taxes | (8,408,724) | (90,342) | 6,001,176 |
Net Income (Loss) | $ 138,635,025 | $ 3,322,892 | $ (253,411,828) |
Basic earnings (loss) per share (in usd per share) | $ 1.14 | $ 0.03 | $ (3.48) |
Diluted earnings (loss) per share (in usd per share) | $ 0.98 | $ 0.03 | $ (3.48) |
STATEMENTS OF STOCKHOLDERS' EQU
STATEMENTS OF STOCKHOLDERS' EQUITY - USD ($) | Total | Common Stock | Additional Paid-in Capital | Retained Earnings (Accumulated Deficit) |
Beginning balance (in shares) at Dec. 31, 2019 | 67,993,797 | |||
Beginning balance at Dec. 31, 2019 | $ 523,509,933 | $ 67,994 | $ 526,301,281 | $ (2,859,342) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||
Return of common stock issued as consideration in asset acquisition (in shares) | (16,702) | |||
Return of common stock issued as consideration in asset acquisition | (103,385) | $ (17) | (103,368) | |
Common stock and warrants issued for cash, net (in shares) | 13,075,800 | |||
Common stock and warrants issued for cash, net | 19,379,832 | $ 13,076 | 19,366,756 | |
Exercise of pre-funded warrants issued in offering (in shares) | 3,300,000 | |||
Exercise of pre-funded warrants issued in offering | 3,300 | $ 3,300 | ||
Common stock issued for services (in shares) | 35,000 | |||
Common stock issued for services | 23,800 | $ 35 | 23,765 | |
Restricted stock vested (in shares) | 1,180,392 | |||
Restricted stock vested | 0 | $ 1,180 | (1,180) | |
Share-based compensation | 5,364,162 | 5,364,162 | ||
Net income (loss) | (253,411,828) | (253,411,828) | ||
Ending balance (in shares) at Dec. 31, 2020 | 85,568,287 | |||
Ending balance at Dec. 31, 2020 | 294,765,813 | $ 85,568 | 550,951,415 | (256,271,170) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||
Common stock and warrants issued for cash, net | (65,000) | (65,000) | ||
Exercise of pre-funded warrants issued in offering (in shares) | 13,428,500 | |||
Exercise of pre-funded warrants issued in offering | 13,429 | $ 13,429 | ||
Exercise of Common warrants issued in offering (in shares) | 442,600 | |||
Exercise of common warrants issued in offering | $ 354,080 | $ 443 | 353,637 | |
Options exercised (in shares) | 100,000 | 100,000 | ||
Options exercised | $ 200,000 | $ 100 | 199,900 | |
Restricted stock vested (in shares) | 785,357 | |||
Restricted stock vested | 0 | $ 785 | (785) | |
Shares to cover tax withholdings (in shares) | (132,182) | |||
Shares to cover tax withholdings | 0 | $ (132) | 132 | |
Payments to cover tax withholdings for restricted stock vested | (385,330) | (385,330) | ||
Share-based compensation | 2,418,323 | 2,418,323 | ||
Net income (loss) | 3,322,892 | 3,322,892 | ||
Ending balance (in shares) at Dec. 31, 2021 | 100,192,562 | |||
Ending balance at Dec. 31, 2021 | 300,624,207 | $ 100,193 | 553,472,292 | (252,948,278) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||
Exercise of Common warrants issued in offering (in shares) | 10,253,907 | |||
Exercise of common warrants issued in offering | $ 8,203,126 | $ 10,254 | 8,192,872 | |
Options exercised (in shares) | 100,000 | 100,000 | ||
Options exercised | $ 0 | $ 100 | (100) | |
Shares elected to be withheld for options exercised (in shares) | (47,506) | |||
Shares elected to be withheld for options exercised | 0 | $ (48) | 48 | |
Restricted stock vested (in shares) | 1,310,894 | |||
Restricted stock vested | 0 | $ 1,311 | (1,311) | |
Shares to cover tax withholdings (in shares) | (168,523) | |||
Shares to cover tax withholdings | 0 | $ (169) | 169 | |
Payments to cover tax withholdings for restricted stock vested | (521,199) | (521,199) | ||
Common stock issuance for Stronghold (in shares) | 21,339,986 | |||
Common stock issuance for Stronghold | 69,141,555 | $ 21,340 | 69,120,215 | |
Conversion of mezzanine preferred shares for Stronghold (in shares) | 42,548,892 | |||
Conversion of mezzanine preferred shares for Stronghold | 137,858,446 | $ 42,549 | 137,815,897 | |
Share-based compensation | 7,162,231 | 7,162,231 | ||
Net income (loss) | 138,635,025 | 138,635,025 | ||
Ending balance (in shares) at Dec. 31, 2022 | 175,530,212 | |||
Ending balance at Dec. 31, 2022 | $ 661,103,391 | $ 175,530 | $ 775,241,114 | $ (114,313,253) |
STATEMENTS OF CASH FLOWS
STATEMENTS OF CASH FLOWS - USD ($) | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Cash Flows From Operating Activities | |||
Net income (loss) | $ 138,635,025 | $ 3,322,892 | $ (253,411,828) |
Adjustments to reconcile net income (loss) to net cash provided by operating activities: | |||
Depreciation, depletion and amortization | 55,740,767 | 37,167,967 | 43,010,660 |
Ceiling test impairment | 0 | 0 | 277,501,943 |
Asset retirement obligation accretion | 983,432 | 744,045 | 906,616 |
Amortization of deferred financing costs | 2,706,021 | 665,882 | 1,190,109 |
Share-based compensation | 7,162,231 | 2,418,323 | 5,364,162 |
Bad debt expense | 242,247 | 0 | 0 |
Shares issued for services | 0 | 0 | 23,800 |
Deferred income tax expense (benefit) | 8,720,992 | 265,479 | (3,975,170) |
Excess tax expense (benefit) related to share-based compensation | (312,268) | (175,187) | (2,026,006) |
(Gain) loss on derivative contracts | 21,532,659 | 77,853,141 | (21,366,068) |
Cash received (paid) for derivative settlements, net | (62,525,954) | (52,768,154) | 22,522,591 |
Changes in assets and liabilities: | |||
Accounts receivable | (17,214,150) | (9,483,639) | 7,896,517 |
Inventory | (5,597,845) | 0 | 0 |
Prepaid expenses and other assets | (1,163,509) | (541,920) | 3,586,146 |
Accounts payable | 50,808,461 | 15,449,215 | (8,380,594) |
Settlement of asset retirement obligation | (2,741,380) | (2,186,832) | (683,623) |
Net Cash Provided by Operating Activities | 196,976,729 | 72,731,212 | 72,159,255 |
Cash Flows From Investing Activities | |||
Payments for the Stronghold Acquisition | (177,823,787) | 0 | 0 |
Payments to purchase oil and natural gas properties | (1,563,703) | (1,368,437) | (1,317,313) |
Payments to develop oil and natural gas properties | (129,332,155) | (51,302,131) | (42,457,745) |
Payments to acquire or improve fixed assets subject to depreciation | (319,945) | (568,832) | (55,339) |
Sale of fixed assets subject to depreciation | 134,600 | 0 | 0 |
Proceeds from divestiture of oil and natural gas properties | 23,700 | 2,000,000 | 0 |
Net Cash (Used in) Investing Activities | (308,881,290) | (51,239,400) | (43,830,397) |
Cash Flows From Financing Activities | |||
Proceeds from revolving line of credit | 636,000,000 | 60,150,000 | 26,500,000 |
Payments on revolving line of credit | (511,000,000) | (83,150,000) | (80,000,000) |
Proceeds from issuance of common stock and warrants | 8,203,126 | 367,509 | 19,383,131 |
Proceeds from option exercise | 0 | 200,000 | 0 |
Payments for taxes withheld on vested restricted shares | (521,199) | (385,330) | 0 |
Proceeds from notes payable | 1,323,354 | 1,297,718 | 0 |
Payments on notes payable | (1,409,884) | (711,308) | 0 |
Payment of deferred financing costs | (18,891,528) | (104,818) | (355,049) |
Reduction of financing lease liabilities | (495,098) | (325,901) | (282,928) |
Net Cash Provided by (Used in) Financing Activities | 113,208,771 | (22,662,130) | (34,754,846) |
Net Increase (Decrease) in Cash | 1,304,210 | (1,170,318) | (6,425,988) |
Cash at Beginning of Period | 2,408,316 | 3,578,634 | 10,004,622 |
Cash at End of Period | 3,712,526 | 2,408,316 | 3,578,634 |
Supplemental Cash Flow Information | |||
Cash paid for interest | 19,818,623 | 14,110,421 | 16,911,344 |
Noncash Investing and Financing Activities | |||
Asset retirement obligation incurred during development | 353,008 | 171,390 | 99,436 |
Asset retirement obligation acquired | 14,538,550 | 662,705 | 0 |
Asset retirement obligation revision of estimate | 0 | 435,419 | 34,441 |
Asset retirement obligation sold | 0 | (2,934,126) | 0 |
Operating lease assets obtained in exchange for new operating lease liability | 754,894 | 839,536 | 823,727 |
Operating lease asset revision | 0 | (621,636) | 0 |
Financing lease assets obtained in exchange for new financing lease liability | 952,101 | 0 | 0 |
Stock issued in property acquisition returned in final settlement | 0 | 0 | 103,385 |
Capitalized expenditures attributable to drilling projects financed through current liabilities | 9,179,003 | 309,365 | 1,415,073 |
Investing Activities - Cash Paid | |||
Cash paid by bank to Stronghold on closing | 121,392,455 | 0 | 0 |
Deposit in escrow | 46,500,000 | 0 | 0 |
Direct transaction costs | 9,162,143 | 0 | 0 |
Cash paid for realized August oil derivative losses | 1,777,925 | 0 | 0 |
Cash paid for inventory and fixed assets acquired | 4,527,103 | 0 | 0 |
Cash received for post-close adjustments, net | (5,535,839) | 0 | 0 |
Payments for the Stronghold Acquisition | 177,823,787 | 0 | 0 |
Investing Activities - Noncash | |||
Assumption of suspense liability | 1,651,596 | 0 | 0 |
Assumption of derivative liabilities | 24,784,406 | 0 | 0 |
Assumption of asset retirement obligation | 14,538,550 | 0 | 0 |
Deferred cash payment at fair value | 14,807,276 | 0 | 0 |
Financing Activities - Noncash | |||
Common stock issued for acquisition | 69,141,555 | 0 | 0 |
Convertible preferred stock issued for acquisition | $ 137,858,446 | $ 0 | $ 0 |
ORGANIZATION, BASIS OF PRESENTA
ORGANIZATION, BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 12 Months Ended |
Dec. 31, 2022 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
ORGANIZATION, BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | ORGANIZATION, BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Organization and Nature of Operations – Ring Energy, Inc., a Nevada corporation (“Ring,” “Ring Energy,” the “Company,” “we,” “us,” “our,” or similar terms), is a growth oriented independent exploration and production company based in The Woodlands, Texas and is engaged in oil and natural gas development, production, acquisition, and exploration activities currently focused in Texas. Our primary drilling operations target the oil and liquids rich producing formations in the Northwest Shelf, the Central Basin Platform, and the Delaware Basin, all of which are part of the Permian Basin in Texas and New Mexico. Reclassifications – Certain prior period amounts relating to components of operating expense have been reclassified to conform to current year presentation within “Costs and Operating Expenses” in the Statements of Operations. Additionally, certain prior amounts associated with realized and unrealized gains (losses) have been reclassified within the Statements of Operations and Statements of Cash Flows to conform with current year presentation. Use of Estimates – The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Changes in the future estimated oil and natural gas reserves or the estimated future cash flows attributable to the reserves that are utilized for impairment analysis could have a significant impact on the future results of operations. Fair Value Measurements - Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (exit price). The Financial Accounting Standards Board (“FASB”) has established a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. This hierarchy consists of three broad levels. Level 1 inputs are the highest priority and consist of unadjusted quoted prices in active markets for identical assets and liabilities. Level 2 are inputs other than quoted prices that are observable for the asset or liability, either directly or indirectly. Level 3 are unobservable inputs for an asset or liability. Fair Values of Financial Instruments – The carrying amounts reported for the revolving line of credit approximates fair value because the underlying instruments are at interest rates which approximate current market rates. The carrying amounts of receivables and accounts payable and other current assets and liabilities approximate fair value because of the short-term maturities and/or liquid nature of these assets and liabilities. Fair Value of Non-financial Assets and Liabilities – The Company also applies fair value accounting guidance to initially, or as events dictate, measure non-financial assets and liabilities such as those obtained through business acquisitions, property and equipment and asset retirement obligations. These assets and liabilities are subject to fair value adjustments only in certain circumstances and are not subject to recurring revaluations. Fair value may be estimated using comparable market data, a discounted cash flow method, or a combination of the two as considered appropriate based on the circumstances. Under the discounted cash flow method, estimated future cash flows are based on management’s expectations for the future and include estimates of future oil and natural gas production or other applicable sales estimates, operational costs and a risk-adjusted discount rate. The Company may use the present value of estimated future cash inflows and/or outflows or third-party offers or prices of comparable assets with consideration of current market conditions to value its non-financial assets and liabilities when circumstances dictate determining fair value is necessary. Given the significance of the unobservable nature of a number of the inputs, these are considered Level 3 on the fair value hierarchy. Concentration of Credit Risk and Accounts Receivable – Financial instruments that potentially subject the Company to a concentration of credit risk consist principally of cash and accounts receivable. The Company has cash in excess of federally insured limits of $3,462,526 and $1,936,805 as of December 31, 2022 and 2021, respectively. The Company places its cash with a high credit quality financial institution. The Company has not experienced any losses in such accounts and believes it is not exposed to significant credit risk in this area. Substantially all of the Company’s accounts receivable is from purchasers of oil and natural gas. Oil and natural gas sales are generally unsecured. The Company has not had any significant credit losses in the past and believes its accounts receivable are fully collectable. The Company also has a joint interest billing receivable. Joint interest billing receivables are collateralized by the pro rata revenue attributable to the joint interest holders and further by the interest itself. Accounts receivable from joint interest owners or purchasers outstanding longer than the contractual payment terms are considered past due. For the years ended December 31, 2022, 2021, and 2020, the Company provided for bad debt expense of $242,247, $0, and $0 respectively, associated with its joint interest billing receivable. As of December 31, 2022 and 2021, the Company's allowance for credit losses was $242,247 and $0, respectively, associated with its joint interest billing receivable. The Company accounts for natural gas production imbalances using the sales method, which recognizes revenue on all natural gas sold even though the natural gas volumes sold may be more or less than the Company's ownership entitles it to sell. Liabilities are recorded for imbalances greater than the Company’s proportionate share of remaining estimated natural gas reserves. The Company recorded no imbalances as of December 31, 2022 or 2021. Cash and Cash Equivalents – The Company considers all highly liquid investments purchased with an original maturity of three months or less to be cash equivalents. Inventory - During 2022, the Company purchased materials and supplies inventories in bulk to lock in prices with certain vendors. Additionally, as a part of the Stronghold Acquisition (discussed further in "Note 5 - ACQUISITIONS & DIVESTITURES"), the Company acquired an inventory yard with significant amounts of inventory. Inventory is added to the books upon the purchase of supplies (inclusive of freight and sales tax costs) to use on well sites, and inventory is reduced by material transfers for inventory usage based on the initial invoiced value. We report the balance of our inventory at the lower of cost or market value. Inventory balances are excluded from the Company's calculation of depletion. Oil and Natural Gas Properties – The Company uses the full cost method of accounting for oil and natural gas properties. Under this method, all costs (direct and indirect) associated with acquisition, exploration, and development of oil and natural gas properties are capitalized. Costs capitalized include acquisition costs, geological and geophysical expenditures, lease rentals on undeveloped properties and costs of drilling and equipping productive and non-productive wells. Drilling costs include directly related overhead costs. Capitalized costs are categorized either as being subject to amortization or not subject to amortization. All of the Company’s capitalized costs, excluding inventory, are subject to amortization. The Company records a liability in the period in which an asset retirement obligation (“ARO”) is incurred, in an amount equal to the discounted estimated fair value of the obligation that is capitalized. Thereafter this liability is accreted up to the final retirement cost. An ARO is a future expenditure related to the disposal or other retirement of certain assets. The Company’s ARO relates to future plugging and abandonment expenses of its oil and natural gas properties and related facilities disposal. Dispositions of oil and natural gas properties are accounted for as adjustments to capitalized costs. All capitalized costs of oil and natural gas properties, including the estimated future costs to develop proved reserves and estimated future costs to plug and abandon wells and costs of site restoration, less the estimated salvage value of equipment associated with the oil and natural gas properties, are amortized on the unit-of-production method using estimates of proved reserves as determined by independent petroleum engineers. If the results of an assessment indicate that the properties are impaired, the amount of the impairment is offset to the capitalized costs to be amortized. The following table shows total depletion and the depletion per barrel-of-oil-equivalent rate, for the years ended December 31, 2022, 2021, and 2020. For the Years Ended December 31, 2022 2021 2020 Depletion $ 55,029,956 $ 36,735,070 $ 42,634,294 Depletion rate, per barrel-of-oil-equivalent (Boe) $ 12.19 $ 11.82 $ 13.25 In addition, capitalized costs less accumulated depreciation, depletion and amortization and related deferred income taxes shall not exceed an amount (the full cost ceiling) equal to the sum of: 1) the present value of estimated future net revenues discounted ten percent computed in compliance with SEC guidelines; 2) plus the cost of properties not being amortized; 3) plus the lower of cost or estimated fair value of unproven properties included in the costs being amortized; 4) less income tax effects related to differences between the book and tax basis of the properties. For the year ended December 31, 2020, the Company recognized an impairment on oil and natural gas properties as a result of the ceiling test in the amount of $277,501,943. No impairment was recorded for the years ended December 31, 2022 or 2021. Land, Buildings, Equipment and Leasehold Improvements – Land, buildings, equipment and leasehold improvements are carried at historical cost, adjusted for impairment loss and accumulated depreciation. Historical costs include all direct costs associated with the acquisition of land, buildings, equipment and leasehold improvements and placing them in service. Depreciation of buildings, equipment , software and leasehold improvements is calculated using the straight-line method based upon the following estimated useful lives: Leasehold improvements 3‑5 years Office equipment and software 3‑7 years Equipment 5‑10 years Automobiles 4 years Depreciation expense was $205,600, $432,897, and $376,366 for the years ended December 31, 2022, 2021, and 2020, respectively. Notes Payable – During 2022, the Company renewed its directors and officers, control of well, and cybersecurity policies, and funded the premiums with three promissory notes with a total face value after down payments of $1,323,354. As of December 31, 2022, the notes payable balance included within current liabilities on the balance sheet is $499,880. During 2021, the Company obtained external insurance for the same policies and funded the premiums by signing three promissory notes. The annual percentage rate (APR) for these notes is 4.08%. For the years ended December 31, 2022 and 2021, interest paid related to notes payable was $25,579 and $17,824, respectively, included within "Interest (expense)" in the Statements of Operations. Revenue Recognition – In January 2018, the Company adopted Accounting Standards Update (“ASU”) 2014-09 Revenues from Contracts with Customers (Topic 606) (“ASU 2014-09”). The timing of recognizing revenue from the sale of produced crude oil and natural gas was not changed as a result of adopting ASU 2014-09. The Company predominantly derives its revenue from the sale of produced crude oil and natural gas. The contractual performance obligation is satisfied when the product is delivered to the customer. Revenue is recorded in the month the product is delivered to the purchaser. The Company receives payment from one to three months after delivery. The transaction price includes variable consideration as product pricing is based on published market prices and reduced for contract specified differentials. The new guidance regarding ASU 2014-09 does not require that the transaction price be fixed or stated in the contract. Estimating the variable consideration does not require significant judgment and Ring engages third party sources to validate the estimates. Revenue is recognized net of royalties due to third parties in an amount that reflects the consideration the Company expects to receive in exchange for those products. See "Note 2 - REVENUE RECOGNITION" for additional information. Income Taxes – Provisions for income taxes are based on taxes payable or refundable for the current year and deferred taxes. Deferred taxes are provided on differences between the tax basis of assets and liabilities and their reported amounts in the financial statements, and tax carryforwards. Deferred tax assets and liabilities are included in the financial statements at currently enacted income tax rates applicable to the period in which the deferred tax assets and liabilities are expected to be realized or settled. As changes in tax laws or rates are enacted, deferred tax assets and liabilities are adjusted through the provision for income taxes. Accounting for Uncertainty in Income Taxes – In accordance with GAAP, the Company has analyzed its filing positions in all jurisdictions where it is required to file income tax returns for the open tax years in such jurisdictions. The Company has identified its federal income tax return and its franchise tax return in Texas in which it operates as “major” tax jurisdictions. The Company’s federal income tax returns for the years ended December 31, 2018 and after remain subject to examination. The Company’s federal income tax returns for the years ended December 31, 2007 and after remain subject to examination to the extent of the net operating loss (NOL) carryforwards. The Company’s franchise tax returns in Texas remain subject to examination for 2017 and after. The Company currently believes that all significant filing positions are highly certain and that all of its significant income tax filing positions and deductions would be sustained upon audit. Therefore, the Company has no significant reserves for uncertain tax positions and no adjustments to such reserves were required by GAAP. No interest or penalties have been levied against the Company and none are anticipated; therefore, no interest or penalty has been included in our provision for income taxes in the statements of operations. Three-Stream Reporting - Beginning July 1, 2022, the Company began reporting volumes and revenues on a three-stream basis, separately reporting crude oil, natural gas, and natural gas liquids ("NGLs") sales. For periods prior to July 1, 2022, sales and reserve volumes, prices, and revenues for NGLs were presented with natural gas. This represents a change in our accounting and reporting presentation necessitated by a change in the underlying facts and circumstances surrounding the Stronghold Acquisition, as Stronghold has historically reported its revenues on a three-stream basis. As clarified in the interpretive guidance of ASC 250, such changes should not be applied on a retrospective basis. Accordingly, we began reporting on a three-stream basis prospectively, beginning July 1, 2022. Leases - The Company accounts for its leases in accordance with ASU 2016-02, Leases (Topic 842), effective January 1, 2019. The Company made accounting policy elections to not capitalize leases with a lease term of twelve months or less (i.e., short term leases) and to not separate lease and non-lease components for all asset classes. The Company also elected to adopt the package of practical expedients within ASU 2016-02 that allows an entity to not reassess prior to the effective date (i) whether any expired or existing contracts are or contain leases, (ii) the lease classification for any expired or existing leases, or (iii) initial direct costs for any existing leases and the practical expedient regarding land easements that exist prior to the adoption of ASU 2016-02. The Company did not elect the practical expedient of hindsight when determining the lease term of existing contracts at the effective date. Earnings (Loss) Per Share – Basic earnings (loss) per share is computed by dividing net income (loss) by the weighted-average number of common shares outstanding during the year. Diluted earnings (loss) per share are calculated to give effect to potentially issuable dilutive common shares. Major Customers – During the year ended December 31, 2022, sales to three customers represented 68%, 13% and 5%, respectively, of total oil, natural gas, and natural gas liquids sales. As of December 31, 2022, sales outstanding from these three customers represented 69%, 7% and 10%, respectively, of accounts receivable. During the year ended December 31, 2021, sales to three customers represented 76%, 7% and 6%, respectively, of total oil and natural gas sales. As of December 31, 2021, sales outstanding from these three customers represented 75%, 8% and 4%, respectively, of accounts receivable. During the year ended December 31, 2020, sales to three customers represented 68%, 10% and 8%, respectively, of total oil and natural gas sales. As of December 31, 2020, sales outstanding from these three customers represented 80%, 0% and 5%, respectively, of accounts receivable. Share-Based Employee Compensation – The Company has outstanding stock option grants and restricted stock awards to directors, officers and employees, which are described more fully in "Note 13 - EMPLOYEE STOCK OPTIONS, RESTRICTED STOCK AWARD PLAN AND 401(K)". The Company recognizes the cost of employee services received in exchange for an award of equity instruments based on the grant-date fair value of the award and recognizes the related compensation expense over the period during which an employee is required to provide service in exchange for the award, which is generally the vesting period. Share-Based Compensation to Non-Employees – The Company accounts for share-based compensation issued to non-employees as either the fair value of the consideration received or the fair value of the equity instruments issued, whichever is more reliably measurable. The measurement date for these issuances is the earlier of (i) the date at which a commitment for performance by the recipient to earn the equity instruments is reached or (ii) the date at which the recipient’s performance is complete. Share-based compensation incurred for the years ended December 31, 2022, 2021, and 2020 was $7,162,231, $2,418,323, and $5,364,162, respectively. Derivative Instruments and Hedging Activities – The Company may periodically enter into derivative contracts to manage its exposure to commodity risk. These derivative contracts, which are generally placed with major financial institutions, may take the form of forward contracts, futures contracts, swaps, or options. The oil and gas reference prices upon which the commodity derivative contracts are based reflect various market indices that have a high degree of historical correlation with actual prices received by the Company for its oil and natural gas production. When applicable, the Company records all derivative instruments, other than those that meet the normal purchases and sales exception, on the balance sheet as either an asset or liability measured at fair value. Changes in fair value are recognized currently in earnings unless specific hedge accounting criteria are met. Refer to "Note 8 - DERIVATIVE FINANCIAL INSTRUMENTS" for further details. Recently Adopted Accounting Pronouncements – In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement (Topic 820): Changes to the Disclosure Requirements for Fair Value Measurement (“ASU 2018-13”). ASU 2018-13 eliminates, adds and modifies certain disclosure requirements for fair value measurement. ASU 2018-13 is effective for annual and interim periods beginning January 1, 2020, with early adoption permitted for either the entire standard or only the provisions that eliminate or modify requirements. ASU 2018-13 requires that the additional disclosure requirements be adopted using a retrospective approach. The adoption of this guidance did not have a material impact on the Company’s financial statements. In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, followed by other related ASUs that provided targeted improvements (collectively “ASU 2016-13”). ASU 2016-13 provides financial statement users with more decision-useful information about the expected credit losses on financial instruments and other commitments to extend credit held by a reporting entity at each reporting date. The guidance is to be applied using a modified retrospective method and is effective for fiscal years beginning after December 15, 2019, with early adoption permitted. The Company adopted ASU 2016-13 on January 1, 2020. The adoption of ASU 2016-13 did not have a material impact to the Company’s financial statements or disclosures. In December 2019, the FASB released ASU No. 2019-12 (“ASU 2019-12”), Income Taxes (Topic 740) – Simplifying the Accounting for Income Taxes, which removes certain exceptions for recognizing deferred taxes for investments, performing intraperiod allocation and calculating income taxes in interim periods. The ASU also adds guidance to reduce complexity in certain areas, including recognizing deferred taxes for tax goodwill and allocating taxes to members of a consolidated group. The amended standard is effective for fiscal years beginning after December 15, 2020. The adoption of ASU 2019-12 did not have a material impact to the Company’s financial statements or disclosures. In October 2020, the FASB issued ASU 2020-10, Codification Improvements ("ASU 2020-10"), which clarifies or improves disclosure requirements for various topics to align with SEC regulations. This update was effective for the Company beginning in the first quarter of 2021 and is being applied retrospectively. The adoption and implementation of this ASU did not have a material impact on the Company’s financial statements. In August 2020, the FASB issued ASU No. 2020-06, “Debt - Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging - Contracts in Entity’s Own Equity (Subtopic 815-40)” (“ASU 2020-06”). ASU 2020-06 was issued to reduce the complexity associated with accounting for certain financial instruments with characteristics of liabilities and equity. The guidance may be applied using either a modified retrospective or a fully retrospective method. ASU 2020-06 is effective for fiscal years beginning after December 15, 2021, with early adoption permitted. The Company adopted ASU 2020-06 effective January 1, 2022. The adoption and implementation of this ASU did not have a material impact on the Company’s financial statements. Recent Accounting Pronouncements – In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting (“ASU 2020-04”), which provides optional expedients and exceptions for applying GAAP to contract modifications and hedging relationships, subject to meeting certain criteria, that reference LIBOR or another rate that is expected to be discontinued. ASU 2020-04 will be in effect through December 31, 2022. In January 2021, issued ASU No. 2021-01, Reference Rate Reform (Topic 848): Scope (“ASU 2021-01”), to provide clarifying guidance regarding the scope of Topic 848. ASU 2020-04 was issued to provide optional guidance for a limited period of time to ease the potential burden in accounting for (or recognizing the effects of) reference rate reform on financial reporting. In December 2022, the FASB issued ASU 2022-06, " Reference Rate Reform (Topic 848): Deferral of the Sunset Date of Topic 848" ("ASU 2022-06"), wh ich defers the sunset date of Topic 848 from December 31, 2022 to December 31, 2024. Beginning August 31, 2022, under the Company's Second Amended and Restated Credit Agreement, the Company's interest rates were transitioned from the LIBOR to the SOFR (Standard Overnight Financing Rate) reference rate. At this time, the Company does not plan to enter into additional contracts using LIBOR as a reference rate. In October 2021, the FASB issued ASU 2021-08, " Business Combinations (Topic 805) – Accounting for Contract Assets and Contract Liabilities from Contracts with Customers” ("ASU 2021-08"). This update requires the acquirer in a business combination to record contract asset and liabilities following Topic 606 – “Revenue from Contracts with Customers” at |
REVENUE RECOGNITION
REVENUE RECOGNITION | 12 Months Ended |
Dec. 31, 2022 | |
Revenue from Contract with Customer [Abstract] | |
REVENUE RECOGNITION | REVENUE RECOGNITION The Company predominantly derives its revenue from the sale of produced crude oil and natural gas. The contractual performance obligation is satisfied when the product is delivered to the customer. Revenue is recorded in the month the product is delivered to the purchaser. The Company receives payment from one to three months after delivery. The Company has utilized the practical expedient in Accounting Standards Codification ("ASC") 606-10-50-14, which states an entity is not required to disclose the transaction price allocated to remaining performance obligations if the variable consideration is allocated entirely to a wholly unsatisfied performance obligation. Under the Company’s sales contracts, each unit of production delivered to a customer represents a separate performance obligation, therefore, future volumes to be delivered are wholly unsatisfied and disclosure of transaction price allocated to remaining performance obligation is not required. The transaction price includes variable consideration as product pricing is based on published market prices and adjusted for contract specified differentials such as quality, energy content and transportation. The guidance does not require that the transaction price be fixed or stated in the contract. Estimating the variable consideration does not require significant judgment and the Company engages third party sources to validate the estimates. Revenue is recognized net of royalties due to third parties in an amount that reflects the consideration the Company expects to receive in exchange for those products. Oil sales Under the Company’s oil sales contracts, the Company sells oil production at the point of delivery and collects an agreed upon index price, net of pricing differentials. The Company recognizes revenue at the net price received when control transfers to the purchaser at the point of delivery and it is probable the Company will collect the consideration it is entitled to receive. Natural gas and NGL sales Under the Company’s natural gas sales processing contracts for our Central Basin Platform properties, Delaware Basin properties and part of our Northwest Shelf assets, the Company delivers unprocessed natural gas to a midstream processing entity at the wellhead. The midstream processing entity obtains control of the natural gas and NGLs (natural gas liquids) at the wellhead. The midstream processing entity gathers and processes the natural gas and NGLs and remits proceeds to the Company for the resulting sale of natural gas and NGLs. Under these processing agreements, the Company recognizes revenue when control transfers to the purchaser at the point of delivery and it is probable the Company will collect the consideration it is entitled to receive. As such, the Company accounts for any fees and deductions as a reduction of the transaction price. Until April 30, 2022, under the Company's natural gas sales processing contracts for the bulk of our Northwest Shelf assets, the Company delivered unprocessed natural gas to a midstream processing entity at the wellhead. However, the Company maintained ownership of the gas through processing and received proceeds from the marketing of the resulting products. Under this processing agreement, the Company recognized the fees associated with the processing as an expense rather than netting these costs against Oil and Natural Gas Revenues in the Statements of Operations. Beginning May 1, 2022, these contracts were combined into one contract, and it was modified so that the Company no longer maintained ownership of the gas through processing. Accordingly, the Company from that point on accounts for any such fees and deductions as a reduction of the transaction price. Disaggregation of Revenue. The following table presents revenues disaggregated by product: For the years ended December 31, 2022 2021 2020 Oil, Natural Gas, and Natural Gas Liquids Revenues Oil $ 321,062,672 $ 181,533,093 $ 109,113,557 Natural gas 18,693,631 14,772,873 3,911,581 Natural gas liquids 7,493,234 — — Total oil, natural gas, and natural gas liquids revenues $ 347,249,537 $ 196,305,966 $ 113,025,138 |
LEASES
LEASES | 12 Months Ended |
Dec. 31, 2022 | |
Leases [Abstract] | |
LEASES | LEASES The Company has operating leases for our offices in Midland, Texas and The Woodlands, Texas. The Midland office is under a five-year lease which began January 1, 2021. The Midland office lease was amended effective October 1, 2022, with the revised five-year lease ending September 30, 2027. Beginning January 15, 2021, the Company entered into a five-and-a-half-year sub-lease for office space in The Woodlands, Texas. The future payments associated with these operating leases are reflected below. During the years ended December 31, 2020 and 2021 the Company had an operating lease with Arenaco, LLC for its Tulsa, Oklahoma office. The Tulsa lease was terminated as of March 31, 2021, with payments made until the end of February 2021. Refer to "Note 14 - RELATED PARTY TRANSACTIONS" for further details. The Company has month to month leases for office equipment and compressors used in our operations on which the Company has elected to apply ASU 2016-02 (i.e. not capitalize). The office equipment and compressors are not subject to ASU 2016-02 based on the agreement and nature of use. These leases are for terms that are less than 12 months and the Company does not intend to continue to lease this equipment for more than 12 months. The lease costs associated with these leases is reflected in the short-term lease costs within Lease operating expenses, shown below. The Company has financing leases for vehicles. These leases have a term of 36 months at the end of which the Company owns the vehicles. These vehicles are generally sold at the end of their term and the proceeds applied to a new vehicle. Future lease payments associated with these operating and financing leases as of December 31, 2022 are as follows: 2023 2024 2025 2026 2027 Operating lease payments (1) $ 474,464 $ 482,328 $ 494,692 $ 398,096 $ 216,000 Financing lease payments (2) 793,723 727,451 379,421 — — (1) The weighted average discount rate as of December 31, 2022 for operating leases was 4.50%. Based on this rate, the future lease payments above include imputed interest of $193,321. The weighted average remaining term of operating leases was 4.29 years. (2) The weighted average discount rate as of December 31, 2022 for financing leases was 5.82%. Based on this rate, the future lease payments above include imputed interest of $138,463. The weighted average remaining term of financing leases was 2.41 years. The following table represents a reconciliation between the undiscounted future cash flows in the table above and the operating and financing lease liabilities disclosed in the Balance Sheets: As of December 31, 2022 2021 Operating lease liability, current portion 398,362 290,766 Operating lease liability, non-current portion 1,473,897 1,138,319 Operating lease liability, total 1,872,259 1,429,085 Total undiscounted future cash flows (sum of future operating lease payments) 2,065,580 1,577,786 Imputed interest 193,321 148,701 Undiscounted future cash flows less imputed interest 1,872,259 1,429,085 Financing lease liability, current portion 709,653 316,514 Financing lease liability, non-current portion 1,052,479 343,727 Financing lease liability, total 1,762,132 660,241 Total undiscounted future cash flows (sum of future financing lease payments) 1,900,595 692,091 Imputed interest 138,463 31,850 Undiscounted future cash flows less imputed interest 1,762,132 660,241 The following table provides supplemental information regarding cash flows from operations: 2022 Operating lease costs $ 363,908 Short-term lease costs (1) $ 2,618,405 Financing lease costs: Amortization of financing lease assets (2) $ 505,211 Interest on lease liabilities (3) $ 48,472 (1) Amount included in Lease operating expenses (2) Amount included in Depreciation, depletion and amortization (3) Amount included in Interest expense |
EARNINGS (LOSS) PER SHARE INFOR
EARNINGS (LOSS) PER SHARE INFORMATION | 12 Months Ended |
Dec. 31, 2022 | |
Earnings Per Share [Abstract] | |
EARNINGS (LOSS) PER SHARE INFORMATION | EARNINGS (LOSS) PER SHARE INFORMATION For the years ended December 31, 2022 2021 2020 Net Income (Loss) $ 138,635,025 $ 3,322,892 $ (253,411,828) Basic Weighted-Average Shares Outstanding 121,264,175 99,387,028 72,891,310 Effect of dilutive securities: Stock options 83,384 75,897 — Restricted stock units 2,040,181 1,613,810 — Performance stock units 248,206 — — Common warrants 18,118,722 20,116,440 — Diluted Weighted-Average Shares Outstanding 141,754,668 121,193,175 72,891,310 Basic Earnings (Loss) per Share $ 1.14 $ 0.03 $ (3.48) Diluted Earnings (Loss) per Share $ 0.98 $ 0.03 $ (3.48) Stock options to purchase 70,500, 113,659, and 465,500 shares of common stock were excluded from the computation of diluted earnings per share during the years ended December 31, 2022, 2021 and 2020, respectively, as their effect would have been anti-dilutive. Also excluded from the computation of diluted earnings per share were 13,512, 20,610, and 2,144,617 shares of unvested restricted stock units during the years ended December 31, 2022, 2021 and 2020, respectively, as their effect would have been anti-dilutive. Unvested performance stock units of 814,255, 94,270, and — were excluded from the computation of diluted earnings per share during the years ended December 31, 2022, 2021, and 2020, respectively, as their effect would have been anti-dilutive. Common warrants to purchase 29,804,300 shares of common stock were excluded from the computation of diluted earnings per share during the year ended December 31, 2020, as their effect would have been anti-dilutive. Pre-funded warrants to purchase 13,428,500 shares of common stock were included in the calculation of the Basic Weighted-Average Shares Outstanding for the year ended December 31, 2020 as they were exercisable for a nominal amount and so were treated as if they were exercised at issuance. These shares were exercised in January 2021 and were included in the beginning shares outstanding for the calculation of Basic Weighted-Average Shares Outstanding for the year ended December 31, 2021. |
ACQUISITIONS & DIVESTITURES
ACQUISITIONS & DIVESTITURES | 12 Months Ended |
Dec. 31, 2022 | |
Business Combination and Asset Acquisition [Abstract] | |
ACQUISITIONS & DIVESTITURES | ACQUISITIONS & DIVESTITURES Andrews County Acquisition The Company entered into a Purchase, Sale and Exchange Agreement dated February 1, 2021, effective January 1, 2021, with an unrelated party, covering the sale and exchange of certain oil and gas interests in Andrews County, Texas. Upon the sale and transfer of wells and leases between the two parties, the Company received a cash consideration of $2,000,000 and reduced the Company’s asset retirement obligations by $2,934,126 for the properties sold and added $662,705 of asset retirement obligations for the wells acquired. Stronghold Acquisition On July 1, 2022, Ring, as buyer, and Stronghold Energy II Operating, LLC, a Delaware limited liability company (“Stronghold OpCo”) and Stronghold Energy II Royalties, LP, a Delaware limited partnership (“Stronghold RoyaltyCo”, together with Stronghold OpCo, collectively, “Stronghold”), as seller, entered into a purchase and sale agreement (the “Purchase Agreement”). Pursuant to the Purchase Agreement, Ring acquired (the “Stronghold Acquisition”) interests in oil and gas leases and related property of Stronghold consisting of approximately 37,000 net acres located in the Central Basin Platform of the Texas Permian Basin. On August 31, 2022, Ring completed the Stronghold Acquisition. The fair value of consideration paid to Stronghold was approximately $394.0 million, of which $165.9 million, net of customary purchase price adjustments, was paid in cash at closing, $15.0 million will be payable in cash after the six-month anniversary of the closing date of the Stronghold Acquisition. Shortly after closing, approximately $4.5 million was paid for inventory and vehicles and approximately $1.8 million was paid for August oil derivative settlements for certain novated hedges. The cash portion of the consideration was funded primarily from borrowings under a new fully committed revolving credit facility (the “Credit Facility”) underwritten by Truist Securities, Citizens Bank, N.A., KeyBanc Capital Markets Inc., and Mizuho Bank, Ltd. The borrowing base of the $1.0 billion Credit Facility was increased from $350.0 million to $600.0 million at the closing of the Stronghold Acquisition. The remaining consideration consisted of 21,339,986 shares of Ring common stock and 153,176 shares of newly created Series A Convertible Preferred Stock, par value $0.001 (“Preferred Stock”) which was converted into 42,548,892 shares of common stock on October 27, 2022. Please see "Note 12 - STOCKHOLDERS' EQUITY" for further discussion. In addition, Ring assumed $24.8 million of derivative liabilities, $1.7 million of items in suspense and $14.5 million in asset retirement obligations. Purchase Price Allocation The Stronghold Acquisition has been accounted for as an asset acquisition in accordance with ASC Topic 805 - Business Combinations. The fair value of the consideration paid by Ring and allocation of that amount to the underlying assets acquired, on a relative fair value basis, was recorded on Ring’s books as of the date of the closing of the Stronghold Acquisition. Additionally, costs directly related to the Stronghold Acquisition were capitalized as a component of the purchase price. Determining the fair value of the assets and liabilities acquired requires judgment and certain assumptions to be made, the most significant of these being related to the valuation of Stronghold’s oil and gas properties. The inputs and assumptions related to the oil and gas properties are categorized as level 3 in the fair value hierarchy. The following table represents the preliminary allocation of the total cost of the Stronghold Acquisition to the assets acquired and liabilities assumed as of the Stronghold Acquisition date: Consideration: Shares of Common Stock issued 21,339,986 Common Stock price as of August 31, 2022 $ 3.24 Common Stock Consideration $ 69,141,555 Shares of Preferred Stock issued 153,176 Aggregate Liquidation Preference $ 153,176,000 Conversion Price $ 3.60 As-Converted Shares of Common Stock 42,548,892 Common Stock Price as of August 31, 2022 $ 3.24 Preferred Stock Consideration $ 137,858,446 Cash consideration: Closing amount paid to Stronghold 121,392,455 Escrow deposit paid 46,500,000 Cash paid for inventory and fixed assets 4,527,103 Cash paid for realized losses on August oil derivatives 1,777,925 Cash received for post-close adjustments, net (5,535,839) Total cash consideration 168,661,644 Fair value of deferred payment liability 14,807,276 Post-close settlement to be paid to Stronghold 3,511,170 Fair value of consideration paid to seller 393,980,091 Direct transaction costs 9,162,143 Total consideration $ 403,142,234 Fair value of assets acquired: Oil and natural gas properties 439,589,683 Inventory and fixed assets 4,527,103 Amount attributable to assets acquired $ 444,116,786 Fair value of liabilities assumed: Suspense liability 1,651,596 Derivative liabilities, marked to market 24,784,406 Asset retirement obligations 14,538,550 Amount attributable to liabilities assumed $ 40,974,552 Net assets acquired $ 403,142,234 Approximately $40.4 million of revenues and $13.6 million of direct operating expenses attributed to the Stronghold Acquisition are included in the Company’s Statements of Operations for the period from September 1, 2022 through December 31, 2022. |
DEPOSIT FORFEITURE INCOME
DEPOSIT FORFEITURE INCOME | 12 Months Ended |
Dec. 31, 2022 | |
DEPOSIT FORFEITURE INCOME | |
DEPOSIT FORFEITURE INCOME | DEPOSIT FORFEITURE INCOMEIn the second quarter of 2020, the Company entered into an agreement with an intended buyer to sell the Company’s Delaware Basin assets. The agreement was amended on six different occasions throughout 2020 releasing the initial deposits to the Company and requiring additional non-refundable deposits. In total, $5,500,000 in non-refundable deposits were made to the Company. In October 2020, the agreement was terminated as the buyer was not able to consummate the transaction. As such, the Company recognized the $5,500,000 as income in its Statements of Operations as no divestiture of assets had occurred. Refer to "Note 17 - LEGAL MATTERS" for further details. |
OIL AND NATURAL GAS PRODUCING A
OIL AND NATURAL GAS PRODUCING ACTIVITIES | 12 Months Ended |
Dec. 31, 2022 | |
Oil and Gas Exploration and Production Industries Disclosures [Abstract] | |
OIL AND NATURAL GAS PRODUCING ACTIVITIES | OIL AND NATURAL GAS PRODUCING ACTIVITIES Set forth below is certain information regarding the aggregate capitalized costs of oil and natural gas properties and costs incurred by the Company for its oil and natural gas property acquisitions, development and exploration activities: Net Capitalized Costs As of December 31, 2022 2021 Oil and natural gas properties, full cost method $ 1,463,838,595 $ 883,844,745 Financing lease asset subject to depreciation 3,019,476 1,422,487 Fixed assets subject to depreciation 3,147,125 2,089,722 Total Properties and Equipment 1,470,005,196 887,356,954 Accumulated depletion, depreciation and amortization (289,935,259) (235,997,307) Net Properties and Equipment $ 1,180,069,937 $ 651,359,647 Net Costs Incurred in Oil and Gas Producing Activities For the years Ended December 31, 2022 2021 Payments for the Stronghold Acquisition $ 177,823,787 $ — Payments to purchase oil and natural gas properties 1,563,703 1,368,437 Proceeds from divestiture of oil and natural gas properties (23,700) (2,000,000) Payments to develop oil and natural gas properties 129,332,155 51,302,131 Payments to acquire or improve fixed assets subject to depreciation 319,945 568,832 Sale of fixed assets subject to depreciation $ (134,600) $ — Total Net Costs Incurred $ 308,881,290 $ 51,239,400 |
DERIVATIVE FINANCIAL INSTRUMENT
DERIVATIVE FINANCIAL INSTRUMENTS | 12 Months Ended |
Dec. 31, 2022 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
DERIVATIVE FINANCIAL INSTRUMENTS | DERIVATIVE FINANCIAL INSTRUMENTS The Company is exposed to fluctuations in crude oil and natural gas prices on its production. It utilizes derivative strategies that consist of either a single derivative instrument or a combination of instruments to manage the variability in cash flows associated with the forecasted sale of our future domestic oil and natural gas production. While the use of derivative instruments may limit or partially reduce the downside risk of adverse commodity price movements, their use also may limit future income from favorable commodity price movements. From time to time the Company enters into derivative contracts to protect the Company’s cash flow from price fluctuation and maintain its capital programs. The Company has historically used either costless collars, deferred premium puts, or swaps for this purpose. Oil derivative contracts are based on WTI Crude Oil prices and natural gas contacts are based on Henry Hub or Waha Hub. A “costless collar” is the combination of two options, a put option (floor) and call option (ceiling) with the options structured so that the premium paid for the put option will be offset by the premium received from selling the call option. Similar to costless collars, there is no cost to enter into the swap contracts. On swap contracts, there is no spread and payments will be made or received based on the difference between WTI and the swap contract price. The deferred premium put contract has the premium established upon entering the contract, and due upon settlement of the contract. The use of derivative transactions involves the risk that the counterparties, which generally are financial institutions, will be unable to meet the financial terms of such transactions. All derivative contracts have been with lenders under our credit facility. Non-performance risk is incorporated in the discount rate by adding the quoted bank (counterparty) credit default swap (CDS) rates to the risk free rate. Beginning September 1, the Company assumed the derivative liabilities (novated hedges) associated with its acquisition of the Stronghold assets (see "Note 5 - ACQUISITIONS & DIVESTITURES"), which are subject to master netting agreements. Additional derivative contracts with the same counterparty are also subject to netting. Still, in accordance with ASC 815-10-50-4B, the Company continues to classify the fair value of all its derivative positions on a gross basis in its corresponding Balance Sheets. The Company’s derivative financial instruments are recorded at fair value and included as either assets or liabilities in the accompanying Balance Sheets. The Company has not designated its derivative instruments as hedges for accounting purposes, and, as a result, any gains or losses resulting from changes in fair value of outstanding derivative financial instruments and from the settlement of derivative financial instruments are recognized in earnings and included as a component of "Other Income (Expense)" under the heading "Gain (loss) on derivative contracts" in the accompanying Statements of Operations. The following presents the impact of the Company’s contracts on its balance sheets for the periods indicated. As of December 31, 2022 2021 Commodity derivative instruments, marked to market: Derivative assets, current 16,193,327 — Discounted deferred premiums (11,524,165) — Derivatives assets, current, net of premiums $ 4,669,162 $ — Derivative assets, noncurrent 7,606,258 — Discounted deferred premiums (1,476,848) — Derivative assets, noncurrent, net of premiums $ 6,129,410 $ — Derivative liabilities, current $ 13,345,619 $ 29,241,558 Derivative liabilities, noncurrent $ 10,485,650 $ — The components of “Gain (loss) on derivative contracts” are as follows for the respective periods: For the years ended December 31, 2022 2021 2020 Oil derivatives: Realized gain (loss) on oil derivatives $ (61,875,870) $ (53,511,332) $ 22,522,591 Unrealized gain (loss) on oil derivatives 40,546,123 (24,143,120) (2,164,779) Gain (loss) on oil derivatives $ (21,329,747) $ (77,654,452) $ 20,357,812 Natural gas derivatives: Realized gain (loss) on natural gas derivatives (650,084) 743,178 — Unrealized gain (loss) on natural gas derivatives 447,172 (941,867) 1,008,256 Gain (loss) on natural gas derivatives $ (202,912) $ (198,689) $ 1,008,256 Gain (loss) on derivative contracts $ (21,532,659) $ (77,853,141) $ 21,366,068 The components of “Cash (paid) received for derivative settlements, net” are as follows for the respective periods: For the years ended December 31, 2022 2021 2020 Cash flows from operating activities Cash (paid) received on oil derivatives $ (61,875,870) $ (53,511,332) $ 22,522,591 Cash (paid) received on natural gas derivatives (650,084) 743,178 — Cash (paid) received from derivative settlements $ (62,525,954) $ (52,768,154) $ 22,522,591 The following tables reflect the details of current derivative contracts as of December 31, 2022 (Quantities are in barrels (Bbl) for the oil derivative contracts and in million British thermal units (MMBtu) for the natural gas derivative contracts.): Oil Hedges (WTI) 2023 2024 Swaps: Hedged volume (Bbl) 389,250 894,000 Weighted average swap price $ 77.55 $ 66.94 Deferred premium puts: Hedged volume (Bbl) 773,500 91,000 Weighted average strike price $ 90.64 $ 83.75 Weighted average deferred premium price $ 15.25 $ 17.32 Two-way collars: Hedged volume (Bbl) 487,622 475,350 Weighted average put price $ 52.16 $ 67.88 Weighted average call price $ 62.94 $ 83.32 Three-way collars: Hedged volume (Bbl) 66,061 — Weighted average first put price $ 45.00 $ — Weighted average second put price $ 55.00 $ — Weighted average call price $ 80.05 $ — Gas Hedges (Henry Hub) 2023 2024 NYMEX Swaps: Hedged volume (MMBtu) 159,890 552,000 Weighted average swap price $ 2.40 $ 4.61 Two-way collars: (1) Hedged volume (MMBtu) 2,258,317 1,712,250 Weighted average put price $ 3.18 $ 4.00 Call hedged volume (MMBtu) 2,140,317 1,712,250 Weighted average call price $ 4.89 $ 6.29 Gas Hedges (basis differential) 2023 2024 Waha basis swaps: Hedged volume (MMBtu) 1,339,685 — Weighted average swap price X ( (2) $ — (1) The two-way collars for the first quarter of 2023 include 2x1 collars where the put volumes of 236,000 are two times the call volumes of 118,000. (2) The WAHA basis swaps in place for the calendar year of 2023 consist of two derivative contracts, each with a fixed price of the Henry Hub natural gas price less a fixed amount (weighted average of $0.55 per MMBtu). |
FAIR VALUE MEASUREMENTS
FAIR VALUE MEASUREMENTS | 12 Months Ended |
Dec. 31, 2022 | |
Fair Value Disclosures [Abstract] | |
FAIR VALUE MEASUREMENTS | FAIR VALUE MEASUREMENTS Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (exit price). The authoritative guidance requires disclosure of the framework for measuring fair value and requires that fair value measurements be classified and disclosed in one of the following categories: Level 1: Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities. We consider active markets as those in which transactions for the assets or liabilities occur with sufficient frequency and volume to provide pricing information on an ongoing basis. Level 2: Quoted prices in markets that are not active, or inputs that are observable, either directly or indirectly, for substantially the full term of the asset or liability. This category includes those derivative instruments that we value using observable market data. Substantially all of these inputs are observable in the marketplace throughout the full term of the derivative instrument, can be derived from observable data or are supported by observable levels at which transactions are executed in the marketplace. Level 3: Measured based on prices or valuation models that require inputs that are both significant to the fair value measurement and less observable from objective sources (i.e., supported by little or no market activity). Financial assets and liabilities are classified based on the lowest level of input that is significant to the fair value measurement. Our assessment of the significance of a particular input to the fair value measurement requires judgment and may affect the valuation of the fair value of assets and liabilities and their placement within the fair value hierarchy. We continue to evaluate our inputs to ensure the fair value level classification is appropriate. When transfers between levels occur, it is our policy to assume that the transfer occurred at the date of the event or change in circumstances that caused the transfer. The fair values of the Company’s derivatives are not actively quoted in the open market. The Company uses a market approach to estimate the fair values of its derivative instruments on a recurring basis, utilizing commodity futures pricing for the underlying commodities provided by a reputable third party, a Level 2 fair value measurement. The Company applies the provisions of the fair value measurement standard on a non-recurring basis to its non-financial assets and liabilities. These assets and liabilities are not measured at fair value on an ongoing basis but are subject to fair value adjustments if events or changes in certain circumstances indicate that adjustments may be necessary. The following table summarizes the valuation of our assets and liabilities that are measured at fair value on a recurring basis (further detail in "Note 8 - DERIVATIVE FINANCIAL INSTRUMENTS"). Fair Value Measurement Classification Quoted prices in Significant Other Significant Total As of December 31, 2021 Commodity Derivatives - Liabilities $ — $ (29,241,588) $ — $ (29,241,588) Total $ — $ (29,241,588) $ — $ (29,241,588) As of December 31, 2022 Commodity Derivatives - Assets $ — $ 10,798,572 $ — $ 10,798,572 Commodity Derivatives - Liabilities $ — $ (23,831,269) $ — $ (23,831,269) Total $ — $ (13,032,697) $ — $ (13,032,697) The carrying amounts reported for the revolving line of credit approximates fair value because the underlying instruments are at interest rates which approximate current market rates. The carrying amounts of receivables and accounts payable and other current assets and liabilities approximate fair value because of the short-term maturities and/or liquid nature of these assets and liabilities. |
REVOLVING LINE OF CREDIT
REVOLVING LINE OF CREDIT | 12 Months Ended |
Dec. 31, 2022 | |
Debt Disclosure [Abstract] | |
REVOLVING LINE OF CREDIT | REVOLVING LINE OF CREDIT On July 1, 2014, the Company entered into a Credit Agreement with SunTrust Bank (now Truist), as lender, issuing bank and administrative agent for several banks and other financial institutions and lenders (the “Administrative Agent”), (which was amended several times) that provided for a maximum borrowing base of $1 billion with security consisting of substantially all of the assets of the Company. In April 2019, the Company amended and restated the Credit Agreement with the Administrative Agent (as amended and restated, the “Credit Facility”). On August 31, 2022, the Company modified its Credit Facility through a Second Amended and Restated Credit Agreement, extending the maturity date of the facility to August 2026. In conjunction with the Stronghold Acquisition, with the newly acquired assets put up for collateral, the Company established a borrowing base of $600 million. The borrowing base is subject to periodic redeterminations, mandatory reductions and further adjustments from time to time. The borrowing base is redetermined semi-annually on each May 1 and November 1. The borrowing base is subject to reduction in certain circumstances such as the sale or disposition of certain oil and gas properties of the Company or its subsidiaries and cancellation of certain hedging positions. The syndicate was modified to add five lenders, replacing five exiting lenders. Rather than Eurodollar loans, the reference rate on the Second Amended and Restated Credit Agreement is the Standard Overnight Financing Rate (“SOFR”). Beginning on the June 30, 2023 financial statements and compliance certification delivery date, the Second Amended and Restated Credit Agreement will allow for the Company to declare dividends for its equity owners, subject to certain limitations. These limitations include (i) no default or event of default has occurred or will occur upon such payments, (ii) the pro forma Leverage Ratio, as defined in the Second Amended and Restated Credit Agreement, does not exceed 2.00 to 1.00, (iii) the amount of such payments does not exceed Available Free Cash Flow, (iv) the Borrowing Base Utilization Percentage is not greater than 80%, and (v) a Responsible Officer certifies that the other four conditions are satisfied. The interest rate on each SOFR Loan will be the adjusted term SOFR for the applicable interest period plus a margin between 3.0% and 4.0% (depending on the then-current level of borrowing base usage). The annual interest rate on each base rate Loan is (a) the greatest of (i) the Administrative Agent’s prime lending rate, (ii) the Federal Funds Rate (as defined in the Second Amended and Restated Credit Agreement) plus 0.5% per annum, (iii) the adjusted term SOFR determined on a daily basis for an interest period of one month, plus 1.00% per annum and (iv) 0.00% per annum, plus (b) a margin between 2.0% and 3.0% per annum (depending on the then-current level of borrowing base usage). The Second Amended and Restated Credit Agreement contains certain covenants, which, among other things, require the maintenance of (i) a total Leverage Ratio (outstanding debt to adjusted earnings before interest, taxes, depreciation and amortization, exploration expenses, and all other non-cash charges acceptable to the Administrative Agent) of not more than 3.0 to 1.0 and (ii) a minimum ratio of Current Assets to Current Liabilities (as such terms are defined in the Second Amended and Restated Credit Agreement) of 1.0 to 1.0. The Company is required to maintain on a rolling 24 months basis, hedging transactions in respect of crude oil and natural gas, on not less than 50% of the projected production from its proved, developed, producing oil and gas. If the borrowing base utilization is less than 25% at the hedge testing date and the leverage ratio is not greater than 1.25 to 1.00, the required hedging percentage for months 13 through 24 of the rolling 24 month period provided for shall be 0% from such hedge testing date to the next succeeding hedge testing date. If the borrowing base utilization percentage is equal to or greater than 25%, but less than 50% and the leverage ratio is not greater than 1.25 to 1.00, the required hedging percentage for months 13 through 24 of the rolling 24 month period provided for shall be 25% from such hedge testing date to the next succeeding hedge testing date. The Second Amended and Restated Credit Agreement also contains other customary affirmative and negative covenants and events of default. As of December 31, 2022, $415,000,000 was outstanding on the Credit Facility. The Company is in compliance with all covenants contained in the Second Amended and Restated Credit Agreement as of December 31, 2022. Under the Second Amended and Restated Credit Agreement, the applicable percentage for the unused commitment fee is 0.5% per annum for all levels of borrowing base utilization. As of December 31, 2022, the Company's unused line of credit was $184,239,562, representative of a borrowing base of $600 million less the outstanding balance of $415 million, and standby letters of credit of $760,438 in total ($260,000 with state and federal agencies and $500,438 with an insurance company for New Mexico surety bonds). Note 15 - COMMITMENTS AND CONTINGENT LIABILITIES describes changes in the surety bonds which did not affect the letters of credit (collateral) aforementioned. |
ASSET RETIREMENT OBLIGATION
ASSET RETIREMENT OBLIGATION | 12 Months Ended |
Dec. 31, 2022 | |
Asset Retirement Obligation Disclosure [Abstract] | |
ASSET RETIREMENT OBLIGATION | NOTE 11 – ASSET RETIREMENT OBLIGATION A reconciliation of the asset retirement obligation for the years ended December 31, 2022, 2021 and 2020 is as follows: Balance, December 31, 2019 $ 16,787,219 Liabilities incurred 99,436 Liabilities settled (710,577) Revision of estimate (1) 34,441 Accretion expense 906,616 Balance, December 31, 2020 $ 17,117,135 Liabilities acquired 662,705 Liabilities incurred 171,390 Liabilities sold (2,934,126) Liabilities settled (904,514) Revision of estimate (1) 435,419 Accretion expense 744,045 Balance, December 31, 2021 $ 15,292,054 Liabilities acquired 14,538,550 Liabilities incurred 353,008 Liabilities settled (940,738) Accretion expense 983,432 Balance, December 31, 2022 $ 30,226,306 (1) Several factors are considered in the annual review process, including current estimates for removal cost and estimated remaining useful life of the assets. The 2020 revision of estimates reflect an adjustment to the estimates for plugging costs. The 2021 revision of estimates primarily reflect updated interests for our working interest partners. |
STOCKHOLDERS' EQUITY
STOCKHOLDERS' EQUITY | 12 Months Ended |
Dec. 31, 2022 | |
Stockholders' Equity Note [Abstract] | |
STOCKHOLDERS' EQUITY | STOCKHOLDERS’ EQUITY The Company is authorized to issue 225,000,000 shares of common stock, with a par value of $0.001 per share, and 50,000,000 shares of preferred stock with a par value per share of $0.001 per share. Issuance of equity instruments in public and private offerings – In October 2020, the Company closed on an underwritten public offering of (i) 9,575,800 shares of common stock, (ii) 13,428,500 Pre-Funded Warrants and (iii) 23,004,300 warrants to purchase common stock (the “Common Warrants”) at a combined purchase price of $0.70. This includes a partial exercise of the over-allotment. The Common Warrants have a term of five years and an exercise price of $0.80 per share. Gross proceeds totaled $16,089,582. Concurrently with the underwritten public offering, the Company closed on a registered direct offering of (i) 3,500,000 shares of common stock, (ii) 3,300,000 Pre-Funded Warrants and (iii) 6,800,000 Common Warrants at a combined purchase price of $0.70 per share of common stock and Pre-Funded Warrants. The Common Warrants have a term of five years and an exercise price of $0.80 per share. Gross proceeds totaled $4,756,700. Total gross proceeds from the 2020 underwritten public offering and the registered direct offering aggregated $20,846,282. Total net proceeds for the Common Warrants exercised in 2020 aggregated $19,379,832. Common stock issued pursuant to warrant exercise - In December 2020, the Company issued 3,300,000 shares of common stock pursuant to the exercise of Pre-Funded Warrants issued in the October 2020 registered direct offering. Gross and net proceeds were $3,300. In January 2021, the remaining 13,428,500 Pre-Funded Warrants were exercised. During the year ended December 31, 2021, 442,600 of the Common Warrants were exercised. Accordingly, the number of Common Warrants outstanding as of December 31, 2021 was 29,361,700. During the year ended December 31, 2022, a total of 10,253,907 Common Warrants were exercised, leaving the Common Warrants outstanding as of December 31, 2022 to be 19,107,793. Common stock returned from property acquisition – As part of the Wishbone asset acquisition in April 2019, the Company issued 4,576,951 shares of common stock. In April 2020, 16,702 shares of common stock were returned and cancelled as settlement of post-closing adjustments. The shares were valued at February 25, 2019, the date of the signing of the Purchase and Sale Agreement. The price on February 25, 2019 was $6.19 per share. The aggregate value of the shares returned, based on this price, was $103,385. Common stock issued for Stronghold acquisition - As part of the Stronghold Acquisition, 21,339,986 shares of common stock were issued to the sellers. Also as part of the Stronghold Acquisition, 153,176 shares of Preferred Stock were issued to the sellers. Each share of Preferred Stock was automatically convertible into 277.7778 shares of common stock upon stockholder approval of the conversion. On October 27, 2022, the Company’s stockholders approved the issuance of, 42,548,892 shares of common stock upon conversion of the 153,176 shares of our Preferred Stock. The preferred shares were automatically converted into such common shares as of October 27, 2022. Refer to "Note 5 - ACQUISITIONS & DIVESTITURES" for the purchase price consideration allocated to the aforementioned stock issuances. Common stock issued for option exercises – During the year ended December 31, 2022 and 2021, the Company issued a net of 52,494 and 100,000 shares of common stock as a result of stock option exercises, respectively. No stock options were exercised in 2020. The following tables present the details of the exercises: Options Exercise Shares Shares Cash paid at Stock price Aggregate value 2021 100,000 $ 2.00 100,000 — $ 200,000 $ 3.14 $ — 2021 Totals 100,000 100,000 — $ 200,000 — 2021 Weighted Averages $ 2.00 $ 3.14 Options Exercise Shares Shares Cash paid at Stock price Aggregate value 2022 100,000 $ 2.00 52,494 47,506 $ — $ 4.21 $ 200,000 2022 Totals 100,000 52,494 47,506 $ — 200,000 2022 Weighted Averages $ 2.00 $ 4.21 |
EMPLOYEE STOCK OPTIONS, RESTRIC
EMPLOYEE STOCK OPTIONS, RESTRICTED STOCK AWARD PLAN AND 401(k) | 12 Months Ended |
Dec. 31, 2022 | |
EMPLOYEE STOCK OPTIONS, RESTRICTED STOCK AWARD PLAN AND 401(k) | |
EMPLOYEE STOCK OPTIONS, RESTRICTED STOCK AWARD PLAN AND 401(k) | EMPLOYEE STOCK OPTIONS, RESTRICTED STOCK AWARD PLAN AND 401(k) In June 2020, officers and directors of the Company voluntarily returned stock options that had previously been granted to them. In total, 2,265,000 options with a weighted average exercise price of $6.87 per share were returned to and cancelled by the Company. No grants, cash payments or other consideration has been or will be made to replace the options or otherwise in connection with the return. As a result of the return and cancellation of the options, the Company incurred additional compensation expense of $768,379. During October and December 2020, as a result of changes to the executive team and the Board of Directors (the “Board”) of the Company, the Company accelerated the vesting of 1,131,955 shares of restricted stock and as a result of such acceleration, the Company incurred additional compensation expense of $2,361,362. Compensation expense charged against income for share-based awards during the years ended December 31, 2022, 2021, and 2020 was $7,162,231, $2,418,323, and $5,364,162, respectively. These amounts are included in general and administrative expense in the Statements of Operations. In 2011, the Board approved and adopted a long-term incentive plan (the “2011 Plan”), which was subsequently approved and amended by the shareholders. There were 341,755 shares eligible for grant, either as stock options or as restricted stock, as of December 31, 2022. In 2021, the Board approved and adopted the Ring Energy, Inc. 2021 Omnibus Incentive Plan (the “2021 Plan”), which was subsequently approved and amended by the shareholders at the 2021 Annual Meeting. There were 5,591,224 shares eligible for grant, either as stock options or as restricted stock, as of December 31, 2022. Employee Stock Options – No stock options have been granted in the years ended December 31, 2022, 2021, or 2020. All outstanding stock option awards vest at the rate of 20% each year over five years beginning one year from the date granted and expire ten years from the grant date. A summary of the status of the stock options as of December 31, 2022, 2021, and 2020 and changes during the years ended December 31, 2022, 2021, and 2020 is as follows: 2022 2021 2020 Options Weighted- Options Weighted- Options Weighted- Outstanding at beginning of year 365,500 $ 3.61 465,500 $ 3.26 2,748,500 $ 6.28 Issued — — — — — — Forfeited or rescinded — — — — (2,283,000) 6.89 Exercised (100,000) 2.00 (100,000) 2.00 — — Outstanding at end of year 265,500 $ 4.21 365,500 $ 3.61 465,500 $ 3.26 Exercisable at end of year 265,500 $ 4.21 365,500 $ 3.61 455,300 $ 3.11 For the years ended December 31, 2022, 2021, and 2020 the Company incurred share-based compensation expense related to stock options of $—, $20,934, and $927,559, respectively. As of December 31, 2022, the Company had $0 of unrecognized compensation cost related to stock options. The aggregate intrinsic value of options vested and expected to vest as of December 31, 2022 was $89,700. The aggregate intrinsic value of options exercisable at December 31, 2022 was $89,700. The year-end intrinsic values are based on a December 31, 2022 closing stock price of $2.46. Stock options exercised of 100,000 shares in 2022 had an aggregate intrinsic value on the date of exercise of $221,000. Stock options exercised of 100,000 shares in 2021 had an aggregate intrinsic value on the date of exercise of $114,000. No stock options were exercised in 2020. The following table summarizes information related to the Company’s stock options outstanding as of December 31, 2022: Options Outstanding Exercise price Number Weighted- Number $ 2.00 195,000 1.00 195,000 5.50 5,000 1.21 5,000 14.54 10,000 2.74 10,000 8.00 4,500 2.92 4,500 6.42 15,000 3.34 15,000 11.75 36,000 3.95 36,000 265,500 1.63 265,500 Restricted stock grants – Following is a table reflecting the restricted stock grants during 2022, 2021 and 2020: Grant date # of shares of October 1, 2020 900,000 October 26, 2020 150,000 December 15, 2020 930,000 April 30, 2021 33,950 June 17, 2021 1,162,152 July 6, 2021 11,824 July 12, 2021 4,007 September 1, 2021 10,417 September 8, 2021 3,306 February 9, 2022 1,247,061 April 13, 2022 7,143 May 10, 2022 10,349 June 16, 2022 2,150 July 14, 2022 8,547 August 29, 2022 30,581 September 1, 2022 37,797 September 19, 2022 49,645 Restricted stock grants issued prior to 2020 vest at the rate of 20% each year over five years beginning one year from the date granted. Restricted stock grants issued during 2020 and in following years vest at a rate of 33% each year over three years beginning one year from the date granted for all employees; for members of the Board, the restricted stock grants vest on the earliest of (i) the day before the next shareholder meeting or (ii) the first anniversary of the date of the award. A summary of the status of restricted stock grants and changes during the years ended December 31, 2022, 2021 and 2020 is as follows: 2022 2021 2020 Restricted stock Weighted- Restricted stock Weighted- Restricted stock Weighted- Outstanding at beginning of year 2,572,596 $ 1.75 2,132,297 $ 2.94 1,341,889 $ 4.99 Granted 1,393,273 2.83 1,225,656 2.77 1,980,000 0.71 Forfeited or rescinded (31,185) 2.83 0 — (9,200) 3.97 Vested (1,310,894) 1.79 (785,357) 1.37 (1,180,392) 4.97 Outstanding at end of year 2,623,790 $ 2.29 2,572,596 $ 1.75 2,132,297 $ 2.94 For the years ended December 31, 2022, 2021 and 2020, the Company incurred share-based compensation expense related to restricted stock grants of $4,148,639, $2,225,895, and $4,436,603, respectively. As of December 31, 2022, the Company had $2,457,386 of unrecognized compensation cost related to restricted stock grants that will be recognized over a weighted average period of 1.78 years. During 2022, 2021, and 2020, 1,310,894, 785,357, and 1,180,392 shares of restricted stock vested, respectively. At the dates of vesting those shares had an aggregate intrinsic value of $3,807,996, $2,049,603, and $801,133, respectively. Performance Stock Units - In accordance with the 2021 Plan, as of November 22, 2021, the Company entered into performance stock unit (“PSU”) agreements (the “PSU Agreement”) with certain employees. Upon approval the Board, a total of 860,216 PSU were granted to the Company’s five executive officers (the “2021 PSU Awards”). The performance period for the 2021 PSU Awards began on January 1, 2021, and will end December 31, 2023, with such awards vesting on the last day of the performance period (the vesting date). The PSUs are performance-based restricted stock units subject to the terms of the 2021 Plan and the PSU Agreement. On February 9, 2022, the Company granted additional PSU awards. A total of 860,216 PSU awards were granted to the Company's five executive officers (the "2022 PSU Awards"). The performance period for the 2022 PSU Awards began on January 1, 2022, and will end on December 31, 2024, with such awards vesting on the last day of the performance period (the vesting date). The PSUs are performance-based restricted stock units subject to the terms of the 2021 Plan and the PSU Agreement. A summary of the status of the performance stock grants as of December 31, 2022 and 2021 along with changes during the year ended December 31, 2022 and 2021 are as follows: 2022 2021 Performance Weighted- Performance Weighted- Outstanding at beginning of year 860,216 $ 3.87 — $ — Granted 860,216 3.65 860,216 3.87 Forfeited or rescinded — — — — Vested — — — — Outstanding at end of year 1,720,432 $ 3.76 860,216 $ 3.87 For the year ended December 31, 2022 and 2021, the Company incurred share-based compensation expense related to the PSU Awards of $3,013,592 and $171,494, respectively. As of December 31, 2022, the Company had $4,037,141 of unrecognized compensation cost related to the PSU Awards that will be recognized over a weighted average period of 1.56 years. 401(k) Plan - In 2019, the Company initiated a sponsored 401(k) plan that is a defined contribution plan for the benefit of all eligible employees. The plan allows eligible employees, after a three-month waiting period, to make pre-tax or after-tax contributions, not to exceed annual limits established by the federal government. The Company makes matching contributions of up to 6% of any employee’s compensation. Employees are 100% vested in the employer contribution upon receipt. The following table presents the matching contributions expense recognized for the Company’s 401(k) plan for the years ended December 31, 2022, 2021, and 2020: 2022 2021 2020 Employer safe harbor match 284,094 228,273 138,997 |
RELATED PARTY TRANSACTIONS
RELATED PARTY TRANSACTIONS | 12 Months Ended |
Dec. 31, 2022 | |
Related Party Transactions [Abstract] | |
RELATED PARTY TRANSACTIONS | RELATED PARTY TRANSACTIONS The Company leased office space in Tulsa, Oklahoma, from Arenaco, LLC (“Arenaco”), a company that is owned by two stockholders of the Company, Mr. Rochford, former Chairman of the Board, and Mr. McCabe, a former director of the Company. During the years ended December 31, 2021 and 2020, the Company paid $10,000 and $60,000 respectively, to Arenaco. The month-to-month Arenaco lease was terminated as of March 31, 2021. During June 2021, the Company began using Pro-Ject Chemicals, LLC (“PJ Chemicals”) to perform various chemical services on its wells. As publicly disclosed on the Company’s website, Paul D. McKinney, Chief Executive Officer and Chairman of the Board, was a member of the board of directors of Pro-Ject Holdings, LLC, a privately owned oil field chemical services company and parent of PJ Chemicals. Mr. McKinney owned 0.34% of the shares of Pro-Ject Holdings, LLC. During the year ended December 31, 2021, the Company paid $117,830 to PJ Chemicals. As of December 31, 2021 the Company had accounts payable of $37,641 due to PJ Chemicals. As of 2022, Mr. McKinney is no longer on the board of directors of Pro-Ject Holdings, LLC. |
COMMITMENTS AND CONTINGENT LIAB
COMMITMENTS AND CONTINGENT LIABILITIES | 12 Months Ended |
Dec. 31, 2022 | |
Commitments and Contingencies Disclosure [Abstract] | |
COMMITMENTS AND CONTINGENT LIABILITIES | NOTE 15 – COMMITMENTS AND CONTINGENT LIABILITIES Standby Letters of Credit – A commercial bank issued standby letters of credit on behalf of the Company totaling $260,000 to state and federal agencies and $500,438 to an insurance company to secure the surety bonds described below. The standby letters of credit are valid until cancelled or matured and are collateralized by the revolving credit facility with the bank. The terms of the letters of credit to the state and federal agencies are extended for a term of one year at a time. The Company intends to renew the standby letters of credit to the state and federal agencies for as long as the Company does business in the States of Texas and New Mexico. The letters of credit to the insurance company will be renewed if the insurance requires them to retain the surety bonds. No amounts have been drawn under the standby letters of credit. Surety Bonds – An insurance company issued surety bonds on behalf of the Company totaling $500,438 to various State of New Mexico agencies in order for the Company to do business in the State of New Mexico. The surety bonds are valid until canceled or matured. The terms of the surety bonds are extended for a term of one year at a time. The Company intends to renew the surety bonds on $400,000 as long as the Company does business in the State of New Mexico. The remaining $100,438 is related to inactive wells and will remain in place until the Company returns those wells to activity or plugs them. One of those wells has been plugged, and the bond released in the amount of $50,150, leaving the amount related to inactive wells as $50,288. On December 23, 2022, the Company increased its blanket plugging surety bond by $200,000. As of December 31, 2022, the Company had surety bonds in total of $650,288. |
INCOME TAXES
INCOME TAXES | 12 Months Ended |
Dec. 31, 2022 | |
Income Tax Disclosure [Abstract] | |
INCOME TAXES | INCOME TAXES For the years ended December 31, 2022, 2021, and 2020, components of our provision for (benefit from) income taxes are as follows: Provision for Income Taxes 2022 2021 2020 Federal deferred tax $ 6,437,680 $ — $ (6,001,176) State deferred tax 1,971,044 90,342 — Provision for (Benefit From) Income Taxes $ 8,408,724 $ 90,342 $ (6,001,176) The following is a reconciliation of income taxes computed using the U.S. federal statutory rate to the provision for (benefit from) income taxes: Rate Reconciliation 2022 2021 2020 Pre-tax book income (loss) $ 147,043,749 $ 3,413,234 $ (259,413,004) Tax at federal statutory rate $ 30,879,187 $ 716,779 $ (54,476,731) Excess tax benefit from stock option exercises and restricted stock vesting (312,268) (175,187) (1,109,379) Adjust prior estimates to tax return 214,740 2,938,948 (1,930,994) States taxes, net of federal benefit 1,443,145 430,654 (964,393) Valuation allowance (24,151,242) (3,827,194) 52,161,412 Non-deductible expenses and other 335,162 6,342 318,909 Provision for (Benefit From) Income Taxes $ 8,408,724 $ 90,342 $ (6,001,176) The Company's deferred tax position reflects the net tax effects of the temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax reporting. The net deferred taxes consisted of the following as of December 31, 2022 and 2021: 12/31/2022 12/31/2021 Deferred Tax Assets Net operating loss (NOL) carryforward 70,564,004 60,155,112 Equity compensation 1,554,680 691,076 Asset retirement obligation 6,635,099 3,348,875 Fair market value of derivatives 2,827,202 6,403,745 §163(j) business interest expense carryforward 4,917,358 — Others 1,173,441 61,077 Gross Deferred Tax Assets 87,671,784 70,659,885 Less: valuation allowance (24,182,975) (48,334,217) Net Deferred Tax Assets 63,488,809 22,325,668 Deferred Tax Liabilities Property and equipment (71,402,820) (22,415,959) Other (585,005) — Net Deferred Liabilities (71,987,825) (22,415,959) Net Deferred Tax Liabilities (8,499,016) (90,292) As of December 31, 2022, the Company had net operating loss carryforwards for federal income tax reporting purposes of approximately $109.3 million which, if unused, will begin to expire in 2027 and fully expire in 2037 and an additional $225.1 million that can be carried forward indefinitely. The shares issued for the Stronghold Acquisition (further discussed in Note 5 - "ACQUISITIONS & DIVESTITURES) resulted in the Company having an ownership change under Section 382 of the Internal Revenue Code of 1986, as amended. Section 382 limits the availability of certain tax attributes, including net operating losses and disallowed interest carryforwards, to offset future taxable income of the Company. In evaluating its need for a valuation allowance against its deferred tax assets, the Company has estimated the amount of tax attributes related to the pre-ownership change period to be available under Section 382 in periods in which it expects deferred tax liabilities to be realized based on currently available information. Based on its current analysis, the Company does not anticipate any material tax attributes to expire unused as result of the Section 382 ownership change; however, the ultimate timing in the amount of tax attributes available in future periods may be different than the Company's current estimate and will be determined in each year as new information becomes available. Changes in expectation in the timing of the availability of the Company's tax attributes could result in adjustments to the valuation allowance in future years as it updates its analysis based on new information. As of December 31, 2022, we carried a valuation allowance against our federal and state deferred tax assets of $24,182,975. We have considered both the positive and negative evidence in determining whether it was more likely than not that some portion or all of our deferred tax assets will be realized. The amount of deferred tax assets considered realizable could, however, be adjusted if estimates of future taxable income during the carryforward period are reduced or increased or if objective negative evidence is no longer present and additional weight is given to subjective positive evidence, including projections for growth. During 2022, the Company determined that certain existing deferred tax assets will not be offset by existing deferred tax liabilities as a result of the 80% limitation on the utilization of net operating losses incurred after 2017. This results in an ending federal net deferred tax liability after valuation allowance of $6,437,680. Additionally, the Company reported a net state deferred tax liability at December 31, 2022 of $2,061,336 attributable to certain state deferred tax liabilities mainly associated with property and equipment. |
LEGAL MATTERS
LEGAL MATTERS | 12 Months Ended |
Dec. 31, 2022 | |
LEGAL MATTERS. | |
LEGAL MATTERS | LEGAL MATTERSThe Company is a defendant in a lawsuit in Harris County District Court, Houston, Texas, styled EPUS Permian Assets, LLC, v. Ring Energy, Inc., that was filed in July 2021. The plaintiff, EPUS Permian Assets, LLC, claims breach of contract, money had and received by fraudulent inducement, unjust enrichment and constructive trust. The plaintiff is requesting its forfeited deposit of $5,500,000 in connection with a proposed property sale by the Company plus related damages, and attorneys’ fees and costs. The action relates to a proposed property sale by the Company to the plaintiff, which was extended by the Company on several occasions with the plaintiff ultimately failing to perform on the agreement and the Company keeping the deposit. The Company believes that the claims by the plaintiff are entirely without merit and is conducting a vigorous defense and counterclaim. The Company has filed an answer and a counterclaim denying the allegations and asserting affirmative defenses that would bar or substantially limit the plaintiff’s claims, asserting breach of contract and requesting a declaratory judgment and attorneys’ fees and costs. The parties have taken depositions and are conducting discovery. |
SUBSEQUENT EVENTS
SUBSEQUENT EVENTS | 12 Months Ended |
Dec. 31, 2022 | |
Subsequent Events [Abstract] | |
SUBSEQUENT EVENTS | SUBSEQUENT EVENTS Stronghold acquisition - On February 28, 2023, as discussed in "Note 5 - ACQUISITIONS & DIVESTITURES," the deferred cash consideration of $15.0 million in cash was paid to Stronghold in accordance with terms set forth in the Purchase Agreement for the Stronghold Acquisition. In addition on March 1, 2023, the holdback amount of approximately $8.3 million which was held in escrow in accordance with the terms set forth in the Purchase Agreement for the Stronghold Acquisition was distributed to Stronghold. Common stock issued pursuant to warrant exercise - On February 2, 2023, the Company issued 2,517,427 shares of common stock pursuant to the exercise of Common Warrants with an exercise price of $0.80. Gross and net proceeds were $2,013,942. On March 1, 2023, the Company issued 2,000,000 shares of common stock pursuant to the exercise of Common Warrants with an exercise price of $0.80. Gross and net proceeds were $1,600,000. |
ORGANIZATION, BASIS OF PRESEN_2
ORGANIZATION, BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 12 Months Ended |
Dec. 31, 2022 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Organization and Nature of Operations | Organization and Nature of Operations – Ring Energy, Inc., a Nevada corporation (“Ring,” “Ring Energy,” the “Company,” “we,” “us,” “our,” or similar terms), is a growth oriented independent exploration and production company based in The Woodlands, Texas and is engaged in oil and natural gas development, production, acquisition, and exploration activities currently focused in Texas. Our primary drilling operations target the oil and liquids rich producing formations in the Northwest Shelf, the Central Basin Platform, and the Delaware Basin, all of which are part of the Permian Basin in Texas and New Mexico. |
Reclassifications | Reclassifications – Certain prior period amounts relating to components of operating expense have been reclassified to conform to current year presentation within “Costs and Operating Expenses” in the Statements of Operations. Additionally, certain prior amounts associated with realized and unrealized gains (losses) have been reclassified within the Statements of Operations and Statements of Cash Flows to conform with current year presentation. |
Use of Estimates | Use of Estimates – The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Changes in the future estimated oil and natural gas reserves or the estimated future cash flows attributable to the reserves that are utilized for impairment analysis could have a significant impact on the future results of operations. |
Fair Value Measurements | Fair Value Measurements - Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (exit price). The Financial Accounting Standards Board (“FASB”) has established a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. This hierarchy consists of three broad levels. Level 1 inputs are the highest priority and consist of unadjusted quoted prices in active markets for identical assets and liabilities. Level 2 are inputs other than quoted prices that are observable for the asset or liability, either directly or indirectly. Level 3 are unobservable inputs for an asset or liability. |
Fair Value of Financial Instruments | Fair Values of Financial Instruments – The carrying amounts reported for the revolving line of credit approximates fair value because the underlying instruments are at interest rates which approximate current market rates. The carrying amounts of receivables and accounts payable and other current assets and liabilities approximate fair value because of the short-term maturities and/or liquid nature of these assets and liabilities. |
Fair Value of Non-financial Assets and Liabilities | Fair Value of Non-financial Assets and Liabilities – The Company also applies fair value accounting guidance to initially, or as events dictate, measure non-financial assets and liabilities such as those obtained through business acquisitions, property and equipment and asset retirement obligations. These assets and liabilities are subject to fair value adjustments only in certain circumstances and are not subject to recurring revaluations. Fair value may be estimated using comparable market data, a discounted cash flow method, or a combination of the two as considered appropriate based on the circumstances. Under the discounted cash flow method, estimated future cash flows are based on management’s expectations for the future and include estimates of future oil and natural gas production or other applicable sales estimates, operational costs and a risk-adjusted discount rate. The Company may use the present value of estimated future cash inflows and/or outflows or third-party offers or prices of comparable assets with consideration of current market conditions to value its non-financial assets and liabilities when circumstances dictate determining fair value is necessary. Given the significance of the unobservable nature of a number of the inputs, these are considered Level 3 on the fair value hierarchy. |
Concentration of Credit Risk and Accounts Receivable | Concentration of Credit Risk and Accounts Receivable – Financial instruments that potentially subject the Company to a concentration of credit risk consist principally of cash and accounts receivable. The Company has cash in excess of federally insured limits of $3,462,526 and $1,936,805 as of December 31, 2022 and 2021, respectively. The Company places its cash with a high credit quality financial institution. The Company has not experienced any losses in such accounts and believes it is not exposed to significant credit risk in this area. Substantially all of the Company’s accounts receivable is from purchasers of oil and natural gas. Oil and natural gas sales are generally unsecured. The Company has not had any significant credit losses in the past and believes its accounts receivable are fully collectable. The Company also has a joint interest billing receivable. Joint interest billing receivables are collateralized by the pro rata revenue attributable to the joint interest holders and further by the interest itself. Accounts receivable from joint interest owners or purchasers outstanding longer than the contractual payment terms are considered past due. For the years ended December 31, 2022, 2021, and 2020, the Company provided for bad debt expense of $242,247, $0, and $0 respectively, associated with its joint interest billing receivable. As of December 31, 2022 and 2021, the Company's allowance for credit losses was $242,247 and $0, respectively, associated with its joint interest billing receivable. The Company accounts for natural gas production imbalances using the sales method, which recognizes revenue on all natural gas sold even though the natural gas volumes sold may be more or less than the Company's ownership entitles it to sell. Liabilities are recorded for imbalances greater than the Company’s proportionate share of remaining estimated natural gas reserves. The Company recorded no imbalances as of December 31, 2022 or 2021. |
Cash and Cash Equivalents | Cash and Cash Equivalents – The Company considers all highly liquid investments purchased with an original maturity of three months or less to be cash equivalents. |
Inventory | Inventory - During 2022, the Company purchased materials and supplies inventories in bulk to lock in prices with certain vendors. Additionally, as a part of the Stronghold Acquisition (discussed further in "Note 5 - ACQUISITIONS & DIVESTITURES"), the Company acquired an inventory yard with significant amounts of inventory. Inventory is added to the books upon the purchase of supplies (inclusive of freight and sales tax costs) to use on well sites, and inventory is reduced by material transfers for inventory usage based on the initial invoiced value. We report the balance of our inventory at the lower of cost or market value. Inventory balances are excluded from the Company's calculation of depletion. |
Oil and Natural Gas Properties | Oil and Natural Gas Properties – The Company uses the full cost method of accounting for oil and natural gas properties. Under this method, all costs (direct and indirect) associated with acquisition, exploration, and development of oil and natural gas properties are capitalized. Costs capitalized include acquisition costs, geological and geophysical expenditures, lease rentals on undeveloped properties and costs of drilling and equipping productive and non-productive wells. Drilling costs include directly related overhead costs. Capitalized costs are categorized either as being subject to amortization or not subject to amortization. All of the Company’s capitalized costs, excluding inventory, are subject to amortization. The Company records a liability in the period in which an asset retirement obligation (“ARO”) is incurred, in an amount equal to the discounted estimated fair value of the obligation that is capitalized. Thereafter this liability is accreted up to the final retirement cost. An ARO is a future expenditure related to the disposal or other retirement of certain assets. The Company’s ARO relates to future plugging and abandonment expenses of its oil and natural gas properties and related facilities disposal. Dispositions of oil and natural gas properties are accounted for as adjustments to capitalized costs. All capitalized costs of oil and natural gas properties, including the estimated future costs to develop proved reserves and estimated future costs to plug and abandon wells and costs of site restoration, less the estimated salvage value of equipment associated with the oil and natural gas properties, are amortized on the unit-of-production method using estimates of proved reserves as determined by independent petroleum engineers. If the results of an assessment indicate that the properties are impaired, the amount of the impairment is offset to the capitalized costs to be amortized. The following table shows total depletion and the depletion per barrel-of-oil-equivalent rate, for the years ended December 31, 2022, 2021, and 2020. For the Years Ended December 31, 2022 2021 2020 Depletion $ 55,029,956 $ 36,735,070 $ 42,634,294 Depletion rate, per barrel-of-oil-equivalent (Boe) $ 12.19 $ 11.82 $ 13.25 In addition, capitalized costs less accumulated depreciation, depletion and amortization and related deferred income taxes shall not exceed an amount (the full cost ceiling) equal to the sum of: 1) the present value of estimated future net revenues discounted ten percent computed in compliance with SEC guidelines; 2) plus the cost of properties not being amortized; 3) plus the lower of cost or estimated fair value of unproven properties included in the costs being amortized; 4) less income tax effects related to differences between the book and tax basis of the properties. For the year ended December 31, 2020, the Company recognized an impairment on oil and natural gas properties as a result of the ceiling test in the amount of $277,501,943. No impairment was recorded for the years ended December 31, 2022 or 2021. |
Land, Buildings, Equipment and Leasehold Improvements | Land, Buildings, Equipment and Leasehold Improvements – Land, buildings, equipment and leasehold improvements are carried at historical cost, adjusted for impairment loss and accumulated depreciation. Historical costs include all direct costs associated with the acquisition of land, buildings, equipment and leasehold improvements and placing them in service. Depreciation of buildings, equipment , software and leasehold improvements is calculated using the straight-line method based upon the following estimated useful lives: Leasehold improvements 3‑5 years Office equipment and software 3‑7 years Equipment 5‑10 years Automobiles 4 years |
Revenue Recognition | Revenue Recognition – In January 2018, the Company adopted Accounting Standards Update (“ASU”) 2014-09 Revenues from Contracts with Customers (Topic 606) (“ASU 2014-09”). The timing of recognizing revenue from the sale of produced crude oil and natural gas was not changed as a result of adopting ASU 2014-09. The Company predominantly derives its revenue from the sale of produced crude oil and natural gas. The contractual performance obligation is satisfied when the product is delivered to the customer. Revenue is recorded in the month the product is delivered to the purchaser. The Company receives payment from one to three months after delivery. The transaction price includes variable consideration as product pricing is based on published market prices and reduced for contract specified differentials. The new guidance regarding ASU 2014-09 does not require that the transaction price be fixed or stated in the contract. Estimating the variable consideration does not require significant judgment and Ring engages third party sources to validate the estimates. Revenue is recognized net of royalties due to third parties in an amount that reflects the consideration the Company expects to receive in exchange for those products. See "Note 2 - REVENUE RECOGNITION" for additional information. |
Income Taxes | Income Taxes – Provisions for income taxes are based on taxes payable or refundable for the current year and deferred taxes. Deferred taxes are provided on differences between the tax basis of assets and liabilities and their reported amounts in the financial statements, and tax carryforwards. Deferred tax assets and liabilities are included in the financial statements at currently enacted income tax rates applicable to the period in which the deferred tax assets and liabilities are expected to be realized or settled. As changes in tax laws or rates are enacted, deferred tax assets and liabilities are adjusted through the provision for income taxes. |
Accounting for Uncertainty in Income Taxes | Accounting for Uncertainty in Income Taxes – In accordance with GAAP, the Company has analyzed its filing positions in all jurisdictions where it is required to file income tax returns for the open tax years in such jurisdictions. The Company has identified its federal income tax return and its franchise tax return in Texas in which it operates as “major” tax jurisdictions. The Company’s federal income tax returns for the years ended December 31, 2018 and after remain subject to examination. The Company’s federal income tax returns for the years ended December 31, 2007 and after remain subject to examination to the extent of the net operating loss (NOL) carryforwards. The Company’s franchise tax returns in Texas remain subject to examination for 2017 and after. The Company currently believes that all significant filing positions are |
Three-Stream Reporting | Three-Stream Reporting - Beginning July 1, 2022, the Company began reporting volumes and revenues on a three-stream basis, separately reporting crude oil, natural gas, and natural gas liquids ("NGLs") sales. For periods prior to July 1, 2022, sales and reserve volumes, prices, and revenues for NGLs were presented with natural gas. This represents a change in our accounting and reporting presentation necessitated by a change in the underlying facts and circumstances surrounding the Stronghold Acquisition, as Stronghold has historically reported its revenues on a three-stream basis. As clarified in the interpretive guidance of ASC 250, such changes should not be applied on a retrospective basis. Accordingly, we began reporting on a three-stream basis prospectively, beginning July 1, 2022. |
Leases | Leases - The Company accounts for its leases in accordance with ASU 2016-02, Leases (Topic 842), effective January 1, 2019. The Company made accounting policy elections to not capitalize leases with a lease term of twelve months or less (i.e., short term leases) and to not separate lease and non-lease components for all asset classes. The Company also elected to adopt the package of practical expedients within ASU 2016-02 that allows an entity to not reassess prior to the effective date (i) whether any expired or existing contracts are or contain leases, (ii) the lease classification for any expired or existing leases, or (iii) initial direct costs for any existing leases and the practical expedient regarding land easements that exist prior to the adoption of ASU 2016-02. The Company did not elect the practical expedient of hindsight when determining the lease term of existing contracts at the effective date. |
Earnings (Loss) Per Share | Earnings (Loss) Per Share – Basic earnings (loss) per share is computed by dividing net income (loss) by the weighted-average number of common shares outstanding during the year. Diluted earnings (loss) per share are calculated to give effect to potentially issuable dilutive common shares. |
Major Customers | Major Customers – During the year ended December 31, 2022, sales to three customers represented 68%, 13% and 5%, respectively, of total oil, natural gas, and natural gas liquids sales. As of December 31, 2022, sales outstanding from these three customers represented 69%, 7% and 10%, respectively, of accounts receivable. During the year ended December 31, 2021, sales to three customers represented 76%, 7% and 6%, respectively, of total oil and natural gas sales. As of December 31, 2021, sales outstanding from these three customers represented 75%, 8% and 4%, respectively, of accounts receivable. During the year ended December 31, 2020, sales to three customers represented 68%, 10% and 8%, respectively, of total oil and natural gas sales. As of December 31, 2020, sales outstanding from these three customers represented 80%, 0% and 5%, respectively, of accounts receivable. |
Stock-Based Employee Compensation | Share-Based Employee Compensation – The Company has outstanding stock option grants and restricted stock awards to directors, officers and employees, which are described more fully in "Note 13 - EMPLOYEE STOCK OPTIONS, RESTRICTED STOCK AWARD PLAN AND 401(K)". The Company recognizes the cost of employee services received in exchange for an award of equity instruments based on the grant-date fair value of the award and recognizes the related compensation expense over the period during which an employee is required to provide service in exchange for the award, which is generally the vesting period. |
Share-Based Compensation to Non-Employees | Share-Based Compensation to Non-Employees – The Company accounts for share-based compensation issued to non-employees as either the fair value of the consideration received or the fair value of the equity instruments issued, whichever is more reliably measurable. The measurement date for these issuances is the earlier of (i) the date at which a commitment for performance by the recipient to earn the equity instruments is reached or (ii) the date at which the recipient’s performance is complete. |
Derivative Instruments and Hedging Activities | Derivative Instruments and Hedging Activities – The Company may periodically enter into derivative contracts to manage its exposure to commodity risk. These derivative contracts, which are generally placed with major financial institutions, may take the form of forward contracts, futures contracts, swaps, or options. The oil and gas reference prices upon which the commodity derivative contracts are based reflect various market indices that have a high degree of historical correlation with actual prices received by the Company for its oil and natural gas production. |
Recently Adopted Accounting Pronouncements and Recent Accounting Pronouncements | Recently Adopted Accounting Pronouncements – In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement (Topic 820): Changes to the Disclosure Requirements for Fair Value Measurement (“ASU 2018-13”). ASU 2018-13 eliminates, adds and modifies certain disclosure requirements for fair value measurement. ASU 2018-13 is effective for annual and interim periods beginning January 1, 2020, with early adoption permitted for either the entire standard or only the provisions that eliminate or modify requirements. ASU 2018-13 requires that the additional disclosure requirements be adopted using a retrospective approach. The adoption of this guidance did not have a material impact on the Company’s financial statements. In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, followed by other related ASUs that provided targeted improvements (collectively “ASU 2016-13”). ASU 2016-13 provides financial statement users with more decision-useful information about the expected credit losses on financial instruments and other commitments to extend credit held by a reporting entity at each reporting date. The guidance is to be applied using a modified retrospective method and is effective for fiscal years beginning after December 15, 2019, with early adoption permitted. The Company adopted ASU 2016-13 on January 1, 2020. The adoption of ASU 2016-13 did not have a material impact to the Company’s financial statements or disclosures. In December 2019, the FASB released ASU No. 2019-12 (“ASU 2019-12”), Income Taxes (Topic 740) – Simplifying the Accounting for Income Taxes, which removes certain exceptions for recognizing deferred taxes for investments, performing intraperiod allocation and calculating income taxes in interim periods. The ASU also adds guidance to reduce complexity in certain areas, including recognizing deferred taxes for tax goodwill and allocating taxes to members of a consolidated group. The amended standard is effective for fiscal years beginning after December 15, 2020. The adoption of ASU 2019-12 did not have a material impact to the Company’s financial statements or disclosures. In October 2020, the FASB issued ASU 2020-10, Codification Improvements ("ASU 2020-10"), which clarifies or improves disclosure requirements for various topics to align with SEC regulations. This update was effective for the Company beginning in the first quarter of 2021 and is being applied retrospectively. The adoption and implementation of this ASU did not have a material impact on the Company’s financial statements. In August 2020, the FASB issued ASU No. 2020-06, “Debt - Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging - Contracts in Entity’s Own Equity (Subtopic 815-40)” (“ASU 2020-06”). ASU 2020-06 was issued to reduce the complexity associated with accounting for certain financial instruments with characteristics of liabilities and equity. The guidance may be applied using either a modified retrospective or a fully retrospective method. ASU 2020-06 is effective for fiscal years beginning after December 15, 2021, with early adoption permitted. The Company adopted ASU 2020-06 effective January 1, 2022. The adoption and implementation of this ASU did not have a material impact on the Company’s financial statements. Recent Accounting Pronouncements – In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting (“ASU 2020-04”), which provides optional expedients and exceptions for applying GAAP to contract modifications and hedging relationships, subject to meeting certain criteria, that reference LIBOR or another rate that is expected to be discontinued. ASU 2020-04 will be in effect through December 31, 2022. In January 2021, issued ASU No. 2021-01, Reference Rate Reform (Topic 848): Scope (“ASU 2021-01”), to provide clarifying guidance regarding the scope of Topic 848. ASU 2020-04 was issued to provide optional guidance for a limited period of time to ease the potential burden in accounting for (or recognizing the effects of) reference rate reform on financial reporting. In December 2022, the FASB issued ASU 2022-06, " Reference Rate Reform (Topic 848): Deferral of the Sunset Date of Topic 848" ("ASU 2022-06"), wh ich defers the sunset date of Topic 848 from December 31, 2022 to December 31, 2024. Beginning August 31, 2022, under the Company's Second Amended and Restated Credit Agreement, the Company's interest rates were transitioned from the LIBOR to the SOFR (Standard Overnight Financing Rate) reference rate. At this time, the Company does not plan to enter into additional contracts using LIBOR as a reference rate. In October 2021, the FASB issued ASU 2021-08, " Business Combinations (Topic 805) – Accounting for Contract Assets and Contract Liabilities from Contracts with Customers” ("ASU 2021-08"). This update requires the acquirer in a business combination to record contract asset and liabilities following Topic 606 – “Revenue from Contracts with Customers” at |
ORGANIZATION, BASIS OF PRESEN_3
ORGANIZATION, BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Schedule of Depletion and Depletion Rate per Barrel of Oil Equivalents | The following table shows total depletion and the depletion per barrel-of-oil-equivalent rate, for the years ended December 31, 2022, 2021, and 2020. For the Years Ended December 31, 2022 2021 2020 Depletion $ 55,029,956 $ 36,735,070 $ 42,634,294 Depletion rate, per barrel-of-oil-equivalent (Boe) $ 12.19 $ 11.82 $ 13.25 |
Schedule of Property Plant and Equipment Estimated Useful Lives | Depreciation of buildings, equipment , software and leasehold improvements is calculated using the straight-line method based upon the following estimated useful lives: Leasehold improvements 3‑5 years Office equipment and software 3‑7 years Equipment 5‑10 years Automobiles 4 years |
REVENUE RECOGNITION (Tables)
REVENUE RECOGNITION (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Revenue from Contract with Customer [Abstract] | |
Schedule of Disaggregation of Revenue | The following table presents revenues disaggregated by product: For the years ended December 31, 2022 2021 2020 Oil, Natural Gas, and Natural Gas Liquids Revenues Oil $ 321,062,672 $ 181,533,093 $ 109,113,557 Natural gas 18,693,631 14,772,873 3,911,581 Natural gas liquids 7,493,234 — — Total oil, natural gas, and natural gas liquids revenues $ 347,249,537 $ 196,305,966 $ 113,025,138 |
LEASES (Tables)
LEASES (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Leases [Abstract] | |
Schedule of Future Lease Payments of Operating Lease and Finance Lease | Future lease payments associated with these operating and financing leases as of December 31, 2022 are as follows: 2023 2024 2025 2026 2027 Operating lease payments (1) $ 474,464 $ 482,328 $ 494,692 $ 398,096 $ 216,000 Financing lease payments (2) 793,723 727,451 379,421 — — (1) The weighted average discount rate as of December 31, 2022 for operating leases was 4.50%. Based on this rate, the future lease payments above include imputed interest of $193,321. The weighted average remaining term of operating leases was 4.29 years. |
Schedule of Lease Cost | The following table provides supplemental information regarding cash flows from operations: 2022 Operating lease costs $ 363,908 Short-term lease costs (1) $ 2,618,405 Financing lease costs: Amortization of financing lease assets (2) $ 505,211 Interest on lease liabilities (3) $ 48,472 (1) Amount included in Lease operating expenses (2) Amount included in Depreciation, depletion and amortization (3) Amount included in Interest expense |
Schedule Of Reconciliation Between The Undiscounted Future Cash Flows And The Operating And Financing Lease Liabilities | The following table represents a reconciliation between the undiscounted future cash flows in the table above and the operating and financing lease liabilities disclosed in the Balance Sheets: As of December 31, 2022 2021 Operating lease liability, current portion 398,362 290,766 Operating lease liability, non-current portion 1,473,897 1,138,319 Operating lease liability, total 1,872,259 1,429,085 Total undiscounted future cash flows (sum of future operating lease payments) 2,065,580 1,577,786 Imputed interest 193,321 148,701 Undiscounted future cash flows less imputed interest 1,872,259 1,429,085 Financing lease liability, current portion 709,653 316,514 Financing lease liability, non-current portion 1,052,479 343,727 Financing lease liability, total 1,762,132 660,241 Total undiscounted future cash flows (sum of future financing lease payments) 1,900,595 692,091 Imputed interest 138,463 31,850 Undiscounted future cash flows less imputed interest 1,762,132 660,241 |
EARNINGS (LOSS) PER SHARE INF_2
EARNINGS (LOSS) PER SHARE INFORMATION (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Earnings Per Share [Abstract] | |
Schedule of Earnings per Share, Basic and Diluted | For the years ended December 31, 2022 2021 2020 Net Income (Loss) $ 138,635,025 $ 3,322,892 $ (253,411,828) Basic Weighted-Average Shares Outstanding 121,264,175 99,387,028 72,891,310 Effect of dilutive securities: Stock options 83,384 75,897 — Restricted stock units 2,040,181 1,613,810 — Performance stock units 248,206 — — Common warrants 18,118,722 20,116,440 — Diluted Weighted-Average Shares Outstanding 141,754,668 121,193,175 72,891,310 Basic Earnings (Loss) per Share $ 1.14 $ 0.03 $ (3.48) Diluted Earnings (Loss) per Share $ 0.98 $ 0.03 $ (3.48) |
ACQUISITIONS & DIVESTITURES (Ta
ACQUISITIONS & DIVESTITURES (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Business Combination and Asset Acquisition [Abstract] | |
Asset Acquisition | The following table represents the preliminary allocation of the total cost of the Stronghold Acquisition to the assets acquired and liabilities assumed as of the Stronghold Acquisition date: Consideration: Shares of Common Stock issued 21,339,986 Common Stock price as of August 31, 2022 $ 3.24 Common Stock Consideration $ 69,141,555 Shares of Preferred Stock issued 153,176 Aggregate Liquidation Preference $ 153,176,000 Conversion Price $ 3.60 As-Converted Shares of Common Stock 42,548,892 Common Stock Price as of August 31, 2022 $ 3.24 Preferred Stock Consideration $ 137,858,446 Cash consideration: Closing amount paid to Stronghold 121,392,455 Escrow deposit paid 46,500,000 Cash paid for inventory and fixed assets 4,527,103 Cash paid for realized losses on August oil derivatives 1,777,925 Cash received for post-close adjustments, net (5,535,839) Total cash consideration 168,661,644 Fair value of deferred payment liability 14,807,276 Post-close settlement to be paid to Stronghold 3,511,170 Fair value of consideration paid to seller 393,980,091 Direct transaction costs 9,162,143 Total consideration $ 403,142,234 Fair value of assets acquired: Oil and natural gas properties 439,589,683 Inventory and fixed assets 4,527,103 Amount attributable to assets acquired $ 444,116,786 Fair value of liabilities assumed: Suspense liability 1,651,596 Derivative liabilities, marked to market 24,784,406 Asset retirement obligations 14,538,550 Amount attributable to liabilities assumed $ 40,974,552 Net assets acquired $ 403,142,234 |
OIL AND NATURAL GAS PRODUCING_2
OIL AND NATURAL GAS PRODUCING ACTIVITIES (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Oil and Gas Exploration and Production Industries Disclosures [Abstract] | |
Schedule of Capitalized Costs Relating to Oil and Natural Gas Producing Activities | As of December 31, 2022 2021 Oil and natural gas properties, full cost method $ 1,463,838,595 $ 883,844,745 Financing lease asset subject to depreciation 3,019,476 1,422,487 Fixed assets subject to depreciation 3,147,125 2,089,722 Total Properties and Equipment 1,470,005,196 887,356,954 Accumulated depletion, depreciation and amortization (289,935,259) (235,997,307) Net Properties and Equipment $ 1,180,069,937 $ 651,359,647 |
Schedule of Net Costs Incurred in Oil and Gas Producing Activities | Net Costs Incurred in Oil and Gas Producing Activities For the years Ended December 31, 2022 2021 Payments for the Stronghold Acquisition $ 177,823,787 $ — Payments to purchase oil and natural gas properties 1,563,703 1,368,437 Proceeds from divestiture of oil and natural gas properties (23,700) (2,000,000) Payments to develop oil and natural gas properties 129,332,155 51,302,131 Payments to acquire or improve fixed assets subject to depreciation 319,945 568,832 Sale of fixed assets subject to depreciation $ (134,600) $ — Total Net Costs Incurred $ 308,881,290 $ 51,239,400 |
DERIVATIVE FINANCIAL INSTRUME_2
DERIVATIVE FINANCIAL INSTRUMENTS (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Schedule of Contracts on the Balance Sheet | The following presents the impact of the Company’s contracts on its balance sheets for the periods indicated. As of December 31, 2022 2021 Commodity derivative instruments, marked to market: Derivative assets, current 16,193,327 — Discounted deferred premiums (11,524,165) — Derivatives assets, current, net of premiums $ 4,669,162 $ — Derivative assets, noncurrent 7,606,258 — Discounted deferred premiums (1,476,848) — Derivative assets, noncurrent, net of premiums $ 6,129,410 $ — Derivative liabilities, current $ 13,345,619 $ 29,241,558 Derivative liabilities, noncurrent $ 10,485,650 $ — |
Schedule of Components of Gain (Loss) on Derivative Contracts | The components of “Gain (loss) on derivative contracts” are as follows for the respective periods: For the years ended December 31, 2022 2021 2020 Oil derivatives: Realized gain (loss) on oil derivatives $ (61,875,870) $ (53,511,332) $ 22,522,591 Unrealized gain (loss) on oil derivatives 40,546,123 (24,143,120) (2,164,779) Gain (loss) on oil derivatives $ (21,329,747) $ (77,654,452) $ 20,357,812 Natural gas derivatives: Realized gain (loss) on natural gas derivatives (650,084) 743,178 — Unrealized gain (loss) on natural gas derivatives 447,172 (941,867) 1,008,256 Gain (loss) on natural gas derivatives $ (202,912) $ (198,689) $ 1,008,256 Gain (loss) on derivative contracts $ (21,532,659) $ (77,853,141) $ 21,366,068 |
Schedule of Components of Cash (Paid) Received for Commodity Derivative Settlements | The components of “Cash (paid) received for derivative settlements, net” are as follows for the respective periods: For the years ended December 31, 2022 2021 2020 Cash flows from operating activities Cash (paid) received on oil derivatives $ (61,875,870) $ (53,511,332) $ 22,522,591 Cash (paid) received on natural gas derivatives (650,084) 743,178 — Cash (paid) received from derivative settlements $ (62,525,954) $ (52,768,154) $ 22,522,591 |
Derivatives Not Designated as Hedging Instruments | The following tables reflect the details of current derivative contracts as of December 31, 2022 (Quantities are in barrels (Bbl) for the oil derivative contracts and in million British thermal units (MMBtu) for the natural gas derivative contracts.): Oil Hedges (WTI) 2023 2024 Swaps: Hedged volume (Bbl) 389,250 894,000 Weighted average swap price $ 77.55 $ 66.94 Deferred premium puts: Hedged volume (Bbl) 773,500 91,000 Weighted average strike price $ 90.64 $ 83.75 Weighted average deferred premium price $ 15.25 $ 17.32 Two-way collars: Hedged volume (Bbl) 487,622 475,350 Weighted average put price $ 52.16 $ 67.88 Weighted average call price $ 62.94 $ 83.32 Three-way collars: Hedged volume (Bbl) 66,061 — Weighted average first put price $ 45.00 $ — Weighted average second put price $ 55.00 $ — Weighted average call price $ 80.05 $ — Gas Hedges (Henry Hub) 2023 2024 NYMEX Swaps: Hedged volume (MMBtu) 159,890 552,000 Weighted average swap price $ 2.40 $ 4.61 Two-way collars: (1) Hedged volume (MMBtu) 2,258,317 1,712,250 Weighted average put price $ 3.18 $ 4.00 Call hedged volume (MMBtu) 2,140,317 1,712,250 Weighted average call price $ 4.89 $ 6.29 Gas Hedges (basis differential) 2023 2024 Waha basis swaps: Hedged volume (MMBtu) 1,339,685 — Weighted average swap price X ( (2) $ — (1) The two-way collars for the first quarter of 2023 include 2x1 collars where the put volumes of 236,000 are two times the call volumes of 118,000. (2) The WAHA basis swaps in place for the calendar year of 2023 consist of two derivative contracts, each with a fixed price of the Henry Hub natural gas price less a fixed amount (weighted average of $0.55 per MMBtu). |
FAIR VALUE MEASUREMENTS (Tables
FAIR VALUE MEASUREMENTS (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Fair Value Disclosures [Abstract] | |
Schedule of Fair Value, Assets and Liabilities Measured on Recurring Basis | The following table summarizes the valuation of our assets and liabilities that are measured at fair value on a recurring basis (further detail in "Note 8 - DERIVATIVE FINANCIAL INSTRUMENTS"). Fair Value Measurement Classification Quoted prices in Significant Other Significant Total As of December 31, 2021 Commodity Derivatives - Liabilities $ — $ (29,241,588) $ — $ (29,241,588) Total $ — $ (29,241,588) $ — $ (29,241,588) As of December 31, 2022 Commodity Derivatives - Assets $ — $ 10,798,572 $ — $ 10,798,572 Commodity Derivatives - Liabilities $ — $ (23,831,269) $ — $ (23,831,269) Total $ — $ (13,032,697) $ — $ (13,032,697) |
ASSET RETIREMENT OBLIGATION (Ta
ASSET RETIREMENT OBLIGATION (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Asset Retirement Obligation Disclosure [Abstract] | |
Schedule of Asset Retirement Obligations | Balance, December 31, 2019 $ 16,787,219 Liabilities incurred 99,436 Liabilities settled (710,577) Revision of estimate (1) 34,441 Accretion expense 906,616 Balance, December 31, 2020 $ 17,117,135 Liabilities acquired 662,705 Liabilities incurred 171,390 Liabilities sold (2,934,126) Liabilities settled (904,514) Revision of estimate (1) 435,419 Accretion expense 744,045 Balance, December 31, 2021 $ 15,292,054 Liabilities acquired 14,538,550 Liabilities incurred 353,008 Liabilities settled (940,738) Accretion expense 983,432 Balance, December 31, 2022 $ 30,226,306 (1) Several factors are considered in the annual review process, including current estimates for removal cost and estimated remaining useful life of the assets. The 2020 revision of estimates reflect an adjustment to the estimates for plugging costs. The 2021 revision of estimates primarily reflect updated interests for our working interest partners. |
STOCKHOLDERS' EQUITY (Tables)
STOCKHOLDERS' EQUITY (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Stockholders' Equity Note [Abstract] | |
Share-Based Payment Arrangement, Option, Exercise Price Range | The following tables present the details of the exercises: Options Exercise Shares Shares Cash paid at Stock price Aggregate value 2021 100,000 $ 2.00 100,000 — $ 200,000 $ 3.14 $ — 2021 Totals 100,000 100,000 — $ 200,000 — 2021 Weighted Averages $ 2.00 $ 3.14 Options Exercise Shares Shares Cash paid at Stock price Aggregate value 2022 100,000 $ 2.00 52,494 47,506 $ — $ 4.21 $ 200,000 2022 Totals 100,000 52,494 47,506 $ — 200,000 2022 Weighted Averages $ 2.00 $ 4.21 |
EMPLOYEE STOCK OPTIONS, RESTR_2
EMPLOYEE STOCK OPTIONS, RESTRICTED STOCK AWARD PLAN AND 401(k) (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
EMPLOYEE STOCK OPTIONS, RESTRICTED STOCK AWARD PLAN AND 401(k) | |
Schedule of Stock Options Activity | A summary of the status of the stock options as of December 31, 2022, 2021, and 2020 and changes during the years ended December 31, 2022, 2021, and 2020 is as follows: 2022 2021 2020 Options Weighted- Options Weighted- Options Weighted- Outstanding at beginning of year 365,500 $ 3.61 465,500 $ 3.26 2,748,500 $ 6.28 Issued — — — — — — Forfeited or rescinded — — — — (2,283,000) 6.89 Exercised (100,000) 2.00 (100,000) 2.00 — — Outstanding at end of year 265,500 $ 4.21 365,500 $ 3.61 465,500 $ 3.26 Exercisable at end of year 265,500 $ 4.21 365,500 $ 3.61 455,300 $ 3.11 |
Schedule of Stock Options Outstanding | The following table summarizes information related to the Company’s stock options outstanding as of December 31, 2022: Options Outstanding Exercise price Number Weighted- Number $ 2.00 195,000 1.00 195,000 5.50 5,000 1.21 5,000 14.54 10,000 2.74 10,000 8.00 4,500 2.92 4,500 6.42 15,000 3.34 15,000 11.75 36,000 3.95 36,000 265,500 1.63 265,500 |
Schedule of Restricted Stock Shares Activity | Following is a table reflecting the restricted stock grants during 2022, 2021 and 2020: Grant date # of shares of October 1, 2020 900,000 October 26, 2020 150,000 December 15, 2020 930,000 April 30, 2021 33,950 June 17, 2021 1,162,152 July 6, 2021 11,824 July 12, 2021 4,007 September 1, 2021 10,417 September 8, 2021 3,306 February 9, 2022 1,247,061 April 13, 2022 7,143 May 10, 2022 10,349 June 16, 2022 2,150 July 14, 2022 8,547 August 29, 2022 30,581 September 1, 2022 37,797 September 19, 2022 49,645 |
Schedule of Restricted Stock Grants | A summary of the status of restricted stock grants and changes during the years ended December 31, 2022, 2021 and 2020 is as follows: 2022 2021 2020 Restricted stock Weighted- Restricted stock Weighted- Restricted stock Weighted- Outstanding at beginning of year 2,572,596 $ 1.75 2,132,297 $ 2.94 1,341,889 $ 4.99 Granted 1,393,273 2.83 1,225,656 2.77 1,980,000 0.71 Forfeited or rescinded (31,185) 2.83 0 — (9,200) 3.97 Vested (1,310,894) 1.79 (785,357) 1.37 (1,180,392) 4.97 Outstanding at end of year 2,623,790 $ 2.29 2,572,596 $ 1.75 2,132,297 $ 2.94 |
Performance Stock Units Activity | A summary of the status of the performance stock grants as of December 31, 2022 and 2021 along with changes during the year ended December 31, 2022 and 2021 are as follows: 2022 2021 Performance Weighted- Performance Weighted- Outstanding at beginning of year 860,216 $ 3.87 — $ — Granted 860,216 3.65 860,216 3.87 Forfeited or rescinded — — — — Vested — — — — Outstanding at end of year 1,720,432 $ 3.76 860,216 $ 3.87 |
Defined Contribution Plan Disclosures | The following table presents the matching contributions expense recognized for the Company’s 401(k) plan for the years ended December 31, 2022, 2021, and 2020: 2022 2021 2020 Employer safe harbor match 284,094 228,273 138,997 |
INCOME TAXES (Tables)
INCOME TAXES (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Income Tax Disclosure [Abstract] | |
Schedule of Components of Income Tax Expense | For the years ended December 31, 2022, 2021, and 2020, components of our provision for (benefit from) income taxes are as follows: Provision for Income Taxes 2022 2021 2020 Federal deferred tax $ 6,437,680 $ — $ (6,001,176) State deferred tax 1,971,044 90,342 — Provision for (Benefit From) Income Taxes $ 8,408,724 $ 90,342 $ (6,001,176) |
Schedule of Effective Income Tax Rate Reconciliation | The following is a reconciliation of income taxes computed using the U.S. federal statutory rate to the provision for (benefit from) income taxes: Rate Reconciliation 2022 2021 2020 Pre-tax book income (loss) $ 147,043,749 $ 3,413,234 $ (259,413,004) Tax at federal statutory rate $ 30,879,187 $ 716,779 $ (54,476,731) Excess tax benefit from stock option exercises and restricted stock vesting (312,268) (175,187) (1,109,379) Adjust prior estimates to tax return 214,740 2,938,948 (1,930,994) States taxes, net of federal benefit 1,443,145 430,654 (964,393) Valuation allowance (24,151,242) (3,827,194) 52,161,412 Non-deductible expenses and other 335,162 6,342 318,909 Provision for (Benefit From) Income Taxes $ 8,408,724 $ 90,342 $ (6,001,176) |
Schedule of Deferred Tax Assets and Liabilities | The Company's deferred tax position reflects the net tax effects of the temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax reporting. The net deferred taxes consisted of the following as of December 31, 2022 and 2021: 12/31/2022 12/31/2021 Deferred Tax Assets Net operating loss (NOL) carryforward 70,564,004 60,155,112 Equity compensation 1,554,680 691,076 Asset retirement obligation 6,635,099 3,348,875 Fair market value of derivatives 2,827,202 6,403,745 §163(j) business interest expense carryforward 4,917,358 — Others 1,173,441 61,077 Gross Deferred Tax Assets 87,671,784 70,659,885 Less: valuation allowance (24,182,975) (48,334,217) Net Deferred Tax Assets 63,488,809 22,325,668 Deferred Tax Liabilities Property and equipment (71,402,820) (22,415,959) Other (585,005) — Net Deferred Liabilities (71,987,825) (22,415,959) Net Deferred Tax Liabilities (8,499,016) (90,292) |
ORGANIZATION, BASIS OF PRESEN_4
ORGANIZATION, BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Narrative (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Organization And Summary Of Significant Accounting Policies [Line Items] | |||
Fair value, concentration of risk, cash and cash equivalents | $ 3,462,526 | $ 1,936,805 | |
Allowance for doubtful accounts | 242,247 | 0 | |
Impairment of oil and gas properties | 0 | $ 277,501,943 | |
Depreciation | 205,600 | 432,897 | 376,366 |
Notes payable current, for obtaining external insurance | 499,880 | ||
Share-based compensation | 7,162,231 | 2,418,323 | 5,364,162 |
Interest expense | 23,167,729 | 14,490,474 | $ 17,617,614 |
Promissory Notes Payable | |||
Organization And Summary Of Significant Accounting Policies [Line Items] | |||
Face value | $ 1,323,354 | ||
Interest rate | 4.08% | ||
Interest expense | $ 25,579 | $ 17,824 | |
Revenue from Contract with Customer Benchmark | Customer Concentration Risk | Customer One | |||
Organization And Summary Of Significant Accounting Policies [Line Items] | |||
Concentration risk, percentage | 68% | 76% | 68% |
Revenue from Contract with Customer Benchmark | Customer Concentration Risk | Customer Two | |||
Organization And Summary Of Significant Accounting Policies [Line Items] | |||
Concentration risk, percentage | 13% | 7% | 10% |
Revenue from Contract with Customer Benchmark | Customer Concentration Risk | Customer Three | |||
Organization And Summary Of Significant Accounting Policies [Line Items] | |||
Concentration risk, percentage | 5% | 6% | 8% |
Accounts Receivable | Customer Concentration Risk | Customer One | |||
Organization And Summary Of Significant Accounting Policies [Line Items] | |||
Concentration risk, percentage | 69% | 75% | 80% |
Accounts Receivable | Customer Concentration Risk | Customer Two | |||
Organization And Summary Of Significant Accounting Policies [Line Items] | |||
Concentration risk, percentage | 7% | 8% | 0% |
Accounts Receivable | Customer Concentration Risk | Customer Three | |||
Organization And Summary Of Significant Accounting Policies [Line Items] | |||
Concentration risk, percentage | 10% | 4% | 5% |
ORGANIZATION, BASIS OF PRESEN_5
ORGANIZATION, BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES- Schedule of Depletion (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||
Depletion | $ 55,029,956 | $ 36,735,070 | $ 42,634,294 |
Depletion rate, per barrel-of-oil-equivalent (Boe) | $ 12.19 | $ 11.82 | $ 13.25 |
ORGANIZATION, BASIS OF PRESEN_6
ORGANIZATION, BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Disaggregation of Revenue (Details) | 12 Months Ended |
Dec. 31, 2022 | |
Leasehold improvements | Minimum | |
Property, Plant and Equipment [Line Items] | |
Property, plant and equipment, useful life | 3 years |
Leasehold improvements | Maximum | |
Property, Plant and Equipment [Line Items] | |
Property, plant and equipment, useful life | 5 years |
Office equipment and software | Minimum | |
Property, Plant and Equipment [Line Items] | |
Property, plant and equipment, useful life | 3 years |
Office equipment and software | Maximum | |
Property, Plant and Equipment [Line Items] | |
Property, plant and equipment, useful life | 7 years |
Equipment | Minimum | |
Property, Plant and Equipment [Line Items] | |
Property, plant and equipment, useful life | 5 years |
Equipment | Maximum | |
Property, Plant and Equipment [Line Items] | |
Property, plant and equipment, useful life | 10 years |
Automobiles | |
Property, Plant and Equipment [Line Items] | |
Property, plant and equipment, useful life | 4 years |
REVENUE RECOGNITION (Details)
REVENUE RECOGNITION (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Revenue from Contract with Customer [Abstract] | |||
Oil | $ 321,062,672 | $ 181,533,093 | $ 109,113,557 |
Natural gas | 18,693,631 | 14,772,873 | 3,911,581 |
Natural gas liquids | 7,493,234 | 0 | 0 |
Total oil, natural gas, and natural gas liquids revenues | $ 347,249,537 | $ 196,305,966 | $ 113,025,138 |
LEASES - Narrative (Details)
LEASES - Narrative (Details) | Dec. 31, 2022 | Oct. 01, 2022 | Jan. 01, 2021 |
Lessee, Lease, Description [Line Items] | |||
Lease term of financing leases for vehicles | 36 months | ||
Midland Office Lease | |||
Lessee, Lease, Description [Line Items] | |||
Lessee, operating lease, term of contract | 5 years | ||
Woodlands Lease | |||
Lessee, Lease, Description [Line Items] | |||
Lessee, operating lease, term of contract | 5 years 6 months | ||
Amended Midland Office Lease | |||
Lessee, Lease, Description [Line Items] | |||
Lessee, operating lease, term of contract | 5 years |
LEASES - Future lease payments
LEASES - Future lease payments (Details) | 12 Months Ended |
Dec. 31, 2022 USD ($) | |
Operating lease payments | |
2023 | $ 474,464 |
2024 | 482,328 |
2025 | 494,692 |
2026 | 398,096 |
2027 | $ 216,000 |
Weighted average discount rate | 4.50% |
Imputed interest | $ 193,321 |
Weighted average remaining term | 4 years 3 months 14 days |
Financing lease payments | |
2023 | $ 793,723 |
2024 | 727,451 |
2025 | 379,421 |
2026 | 0 |
2027 | $ 0 |
Weighted average discount rate | 5.82% |
Imputed interest | $ 138,463 |
Weighted average remaining term | 2 years 4 months 28 days |
LEASES - Reconciliation between
LEASES - Reconciliation between the undiscounted future cash flows in the table above and the operating and financing lease liabilities (Details) - USD ($) | Dec. 31, 2022 | Dec. 31, 2021 |
Operating lease liability: | ||
Operating lease liability, current portion | $ 398,362 | $ 290,766 |
Operating lease liability, non-current portion | 1,473,897 | 1,138,319 |
Operating lease liability, total | 1,872,259 | 1,429,085 |
Total undiscounted future cash flows (sum of future operating lease payments) | 2,065,580 | 1,577,786 |
Imputed interest | 193,321 | 148,701 |
Undiscounted future cash flows less imputed interest | 1,872,259 | 1,429,085 |
Financing lease liability: | ||
Financing lease liability, current portion | 709,653 | 316,514 |
Financing lease liability, non-current portion | 1,052,479 | 343,727 |
Financing lease liability, total | 1,762,132 | 660,241 |
Total undiscounted future cash flows (sum of future financing lease payments) | 1,900,595 | 692,091 |
Imputed interest | 138,463 | 31,850 |
Undiscounted future cash flows less imputed interest | $ 1,762,132 | $ 660,241 |
LEASES - Supplemental informati
LEASES - Supplemental information regarding cash flows from operations (Details) | 12 Months Ended |
Dec. 31, 2022 USD ($) | |
Leases [Abstract] | |
Operating lease costs | $ 363,908 |
Short term lease costs | 2,618,405 |
Financing lease costs: | |
Amortization of financing lease assets | 505,211 |
Interest on lease liabilities | $ 48,472 |
EARNINGS (LOSS) PER SHARE INF_3
EARNINGS (LOSS) PER SHARE INFORMATION (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |||
Net Income (Loss) | $ 138,635,025 | $ 3,322,892 | $ (253,411,828) |
Basic Weighted-Average Shares Outstanding | 121,264,175 | 99,387,028 | 72,891,310 |
Effect of dilutive securities: | |||
Diluted Weighted-Average Shares Outstanding | 141,754,668 | 121,193,175 | 72,891,310 |
Basic earnings (loss) per share (in usd per share) | $ 1.14 | $ 0.03 | $ (3.48) |
Diluted earnings (loss) per share (in usd per share) | $ 0.98 | $ 0.03 | $ (3.48) |
Common warrants | |||
Effect of dilutive securities: | |||
Weighted average number diluted shares outstanding adjustment | 18,118,722 | 20,116,440 | 0 |
Restricted stock units | |||
Effect of dilutive securities: | |||
Weighted average number diluted shares outstanding adjustment | 2,040,181 | 1,613,810 | 0 |
Performance stock units | |||
Effect of dilutive securities: | |||
Weighted average number diluted shares outstanding adjustment | 248,206 | 0 | 0 |
Stock options | |||
Effect of dilutive securities: | |||
Weighted average number diluted shares outstanding adjustment | 83,384 | 75,897 | 0 |
EARNINGS (LOSS) PER SHARE INF_4
EARNINGS (LOSS) PER SHARE INFORMATION - Narrative (Details) - shares | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |||
Pre funded warrants (in shares) | 13,428,500 | ||
Common warrants | |||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |||
Number of shares excluded from the computation of diluted earnings per share (in shares) | 29,804,300 | ||
Restricted stock units | |||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |||
Number of shares excluded from the computation of diluted earnings per share (in shares) | 13,512 | 20,610 | 2,144,617 |
Performance Shares | |||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |||
Number of shares excluded from the computation of diluted earnings per share (in shares) | 814,255 | 94,270 | 0 |
Common Stock | |||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |||
Number of shares excluded from the computation of diluted earnings per share (in shares) | 70,500 | 113,659 | 465,500 |
ACQUISITIONS & DIVESTITURES - N
ACQUISITIONS & DIVESTITURES - Narrative (Details) $ / shares in Units, a in Thousands | 4 Months Ended | 12 Months Ended | ||||||
Aug. 31, 2022 USD ($) a $ / shares shares | Dec. 31, 2022 USD ($) $ / shares | Dec. 31, 2022 USD ($) $ / shares | Dec. 31, 2021 USD ($) $ / shares | Dec. 31, 2020 USD ($) | Aug. 30, 2022 USD ($) | Dec. 31, 2019 USD ($) | Jul. 01, 2014 USD ($) | |
Business Acquisition [Line Items] | ||||||||
Asset retirement obligation sold | $ 0 | $ 2,934,126 | $ 0 | |||||
Asset retirement obligations for wells acquired | $ 14,538,550 | $ 662,705 | ||||||
Line of credit facility, maximum borrowing capacity | $ 600,000,000 | $ 1,000,000,000 | ||||||
Preferred stock, par value (in dollars per share) | $ / shares | $ 0.001 | $ 0.001 | $ 0.001 | |||||
Asset retirement obligations | $ 30,226,306 | $ 30,226,306 | $ 15,292,054 | $ 17,117,135 | $ 16,787,219 | |||
Revolving Credit Facility | Line of Credit | Credit Facility | ||||||||
Business Acquisition [Line Items] | ||||||||
Line of credit facility, maximum borrowing capacity | 1,000,000,000 | |||||||
Line of credit facility, current borrowing capacity | $ 600,000,000 | $ 350,000,000 | ||||||
Stronghold Acquisition | ||||||||
Business Acquisition [Line Items] | ||||||||
Area of land | a | 37 | |||||||
Fair value of consideration paid to seller | $ 393,980,091 | |||||||
Payments for asset acquisition | 165,900,000 | |||||||
Contingent consideration | $ 15,000,000 | |||||||
Payment period | 6 months | |||||||
Inventory and fixed assets | $ 4,527,103 | |||||||
Cash paid for realized losses on August oil derivatives | $ 1,777,925 | |||||||
Shares of Common Stock issued (in shares) | shares | 21,339,986 | |||||||
Shares of Preferred Stock issued (in shares) | shares | 153,176 | |||||||
Preferred stock, par value (in dollars per share) | $ / shares | $ 0.001 | |||||||
As-Converted Shares of Ring Common Stock (in shares) | shares | 42,548,892 | |||||||
Commodity Derivatives - Liabilities | $ 24,784,406 | |||||||
Suspense liability | 1,651,596 | |||||||
Asset retirement obligations | $ 14,538,550 | |||||||
Vin Fisher Operating Inc | ||||||||
Business Acquisition [Line Items] | ||||||||
Cash consideration | 2,000,000 | |||||||
Asset retirement obligations for wells acquired | $ 662,705 | |||||||
Stronghold Energy II Operating LLC | ||||||||
Business Acquisition [Line Items] | ||||||||
Revenues | 40,400,000 | |||||||
Operating expenses | $ 13,600,000 |
ACQUISITIONS & DIVESTITURES - S
ACQUISITIONS & DIVESTITURES - Stronghold Acquisition - Preliminary Allocation of the Total Cost (Details) - USD ($) | 12 Months Ended | ||||
Aug. 31, 2022 | Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Cash consideration: | |||||
Closing amount paid to Stronghold | $ 121,392,455 | $ 0 | $ 0 | ||
Cash received for post-close adjustments, net | (5,535,839) | 0 | 0 | ||
Fair value of assets acquired: | |||||
Oil and natural gas properties | 1,463,838,595 | 883,844,745 | |||
Fair value of liabilities assumed: | |||||
Asset retirement obligations | $ 30,226,306 | $ 15,292,054 | $ 17,117,135 | $ 16,787,219 | |
Stronghold Acquisition | |||||
Consideration: | |||||
Shares of Common Stock issued (in shares) | 21,339,986 | ||||
Ring Common Stock Price (in dollars per share) | $ 3.24 | ||||
Common Stock Consideration | $ 69,141,555 | ||||
Shares of Preferred Stock issued (in shares) | 153,176 | ||||
Aggregate Liquidation Preference | $ 153,176,000 | ||||
Conversion Price (in dollars per share) | $ 3.60 | ||||
As-Converted Shares of Ring Common Stock (in shares) | 42,548,892 | ||||
Preferred Stock Consideration | $ 137,858,446 | ||||
Cash consideration: | |||||
Closing amount paid to Stronghold | 121,392,455 | ||||
Escrow deposit paid | 46,500,000 | ||||
Cash paid for inventory and fixed assets | 4,527,103 | ||||
Cash paid for realized losses on August oil derivatives | 1,777,925 | ||||
Cash received for post-close adjustments, net | (5,535,839) | ||||
Total cash consideration | 168,661,644 | ||||
Fair value of deferred payment liability | 14,807,276 | ||||
Post-close settlement to be paid to Stronghold | 3,511,170 | ||||
Fair value of consideration paid to seller | 393,980,091 | ||||
Direct transaction costs | 9,162,143 | ||||
Total consideration | 403,142,234 | ||||
Fair value of assets acquired: | |||||
Oil and natural gas properties | 439,589,683 | ||||
Inventory and fixed assets | 4,527,103 | ||||
Amount attributable to assets acquired | 444,116,786 | ||||
Fair value of liabilities assumed: | |||||
Suspense liability | 1,651,596 | ||||
Derivative liabilities, marked to market | 24,784,406 | ||||
Asset retirement obligations | 14,538,550 | ||||
Amount attributable to liabilities assumed | 40,974,552 | ||||
Net assets acquired | $ 403,142,234 |
DEPOSIT FORFEITURE INCOME (Deta
DEPOSIT FORFEITURE INCOME (Details) | 1 Months Ended | 12 Months Ended | ||
Oct. 31, 2020 USD ($) | Dec. 31, 2022 USD ($) | Dec. 31, 2021 USD ($) | Dec. 31, 2020 USD ($) item | |
DEPOSIT FORFEITURE INCOME | ||||
Number of occasions in which Company entered into an agreement | item | 6 | |||
Non-refundable deposits | $ 5,500,000 | $ 5,500,000 | ||
Deposit forfeiture income | $ 5,500,000 | $ 0 | $ 0 | $ 5,500,000 |
OIL AND NATURAL GAS PRODUCING_3
OIL AND NATURAL GAS PRODUCING ACTIVITIES - Capitalized Costs Relating to Oil and Natural Gas Producing Activities (Details) - USD ($) | Dec. 31, 2022 | Dec. 31, 2021 |
Oil and Gas Exploration and Production Industries Disclosures [Abstract] | ||
Oil and natural gas properties, full cost method | $ 1,463,838,595 | $ 883,844,745 |
Financing lease asset subject to depreciation | 3,019,476 | 1,422,487 |
Fixed assets subject to depreciation | 3,147,125 | 2,089,722 |
Total Properties and Equipment | 1,470,005,196 | 887,356,954 |
Accumulated depletion, depreciation and amortization | (289,935,259) | (235,997,307) |
Net Properties and Equipment | $ 1,180,069,937 | $ 651,359,647 |
OIL AND NATURAL GAS PRODUCING_4
OIL AND NATURAL GAS PRODUCING ACTIVITIES - Net Costs Incurred in Oil and Gas Producing Activities (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Oil and Gas Exploration and Production Industries Disclosures [Abstract] | |||
Payments for the Stronghold Acquisition | $ 177,823,787 | $ 0 | $ 0 |
Payments to purchase oil and natural gas properties | 1,563,703 | 1,368,437 | 1,317,313 |
Proceeds from divestiture of oil and natural gas properties | (23,700) | (2,000,000) | 0 |
Payments to develop oil and natural gas properties | 129,332,155 | 51,302,131 | 42,457,745 |
Payments to acquire or improve fixed assets subject to depreciation | 319,945 | 568,832 | 55,339 |
Proceeds from Sale of Machinery and Equipment | (134,600) | 0 | $ 0 |
Total Net Costs Incurred | $ 308,881,290 | $ 51,239,400 |
DERIVATIVE FINANCIAL INSTRUME_3
DERIVATIVE FINANCIAL INSTRUMENTS - Impact of Company's contracts on its Balance Sheets (Details) - USD ($) | Dec. 31, 2022 | Dec. 31, 2021 |
Assets | ||
Derivative assets, current | $ 16,193,327 | $ 0 |
Discounted deferred premiums | (11,524,165) | 0 |
Derivatives assets, current, net of premiums | 4,669,162 | 0 |
Derivative assets, noncurrent | 7,606,258 | 0 |
Discounted deferred premiums | (1,476,848) | 0 |
Derivative assets, noncurrent, net of premiums | 6,129,410 | 0 |
Commodity derivative instruments, marked to market: | ||
Derivative assets, current | 13,345,619 | 29,241,558 |
Derivatives assets, current, net of premiums | $ 10,485,650 | $ 0 |
DERIVATIVE FINANCIAL INSTRUME_4
DERIVATIVE FINANCIAL INSTRUMENTS - Components of gain (loss) on derivative contracts (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Derivative Instruments, Gain (Loss) [Line Items] | |||
Unrealized gain (loss) on derivatives | $ (21,532,659) | $ (77,853,141) | $ 21,366,068 |
Gain (loss) on derivative contracts | (21,532,659) | (77,853,141) | 21,366,068 |
Oil | |||
Derivative Instruments, Gain (Loss) [Line Items] | |||
Realized gain (loss) on derivatives | (61,875,870) | (53,511,332) | 22,522,591 |
Unrealized gain (loss) on derivatives | 40,546,123 | (24,143,120) | (2,164,779) |
Gain (loss) on derivative contracts | (21,329,747) | (77,654,452) | 20,357,812 |
Natural Gas | |||
Derivative Instruments, Gain (Loss) [Line Items] | |||
Realized gain (loss) on derivatives | (650,084) | 743,178 | 0 |
Unrealized gain (loss) on derivatives | 447,172 | (941,867) | 1,008,256 |
Gain (loss) on derivative contracts | $ (202,912) | $ (198,689) | $ 1,008,256 |
DERIVATIVE FINANCIAL INSTRUME_5
DERIVATIVE FINANCIAL INSTRUMENTS - Schedule of Components of Cash (Paid) Received for Commodity Derivative Settlements (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Cash flows from operating activities | |||
Cash (paid) received for derivative settlements | $ (62,525,954) | $ (52,768,154) | $ 22,522,591 |
Oil | |||
Cash flows from operating activities | |||
Cash (paid) received for derivative settlements | (61,875,870) | (53,511,332) | 22,522,591 |
Natural Gas | |||
Cash flows from operating activities | |||
Cash (paid) received for derivative settlements | $ (650,084) | $ 743,178 | $ 0 |
DERIVATIVE FINANCIAL INSTRUME_6
DERIVATIVE FINANCIAL INSTRUMENTS - Current derivative contracts (Details) | 3 Months Ended | 12 Months Ended |
Mar. 31, 2023 MMBTU | Dec. 31, 2022 MMBTU contract $ / MMBTU $ / bbl bbl | |
Oil | Swap | 2023 | ||
Derivative Instruments, Gain (Loss) [Line Items] | ||
Hedged volume (Bbl) | bbl | 389,250 | |
Weighted average swap price | 77.55 | |
Oil | Swap | 2024 | ||
Derivative Instruments, Gain (Loss) [Line Items] | ||
Hedged volume (Bbl) | bbl | 894,000 | |
Weighted average swap price | 66.94 | |
Oil | Deferred premium puts | 2023 | ||
Derivative Instruments, Gain (Loss) [Line Items] | ||
Hedged volume (Bbl) | bbl | 773,500 | |
Weighted average strike price | 90.64 | |
Weighted average deferred premium price | 15.25 | |
Oil | Deferred premium puts | 2024 | ||
Derivative Instruments, Gain (Loss) [Line Items] | ||
Hedged volume (Bbl) | bbl | 91,000 | |
Weighted average strike price | 83.75 | |
Weighted average deferred premium price | 17.32 | |
Oil | Three-way collars | 2023 | ||
Derivative Instruments, Gain (Loss) [Line Items] | ||
Hedged volume (Bbl) | bbl | 66,061 | |
Weighted average put price | 45 | |
Weighted average second put price | 55 | |
Weighted average call price | 80.05 | |
Oil | Three-way collars | 2024 | ||
Derivative Instruments, Gain (Loss) [Line Items] | ||
Hedged volume (Bbl) | bbl | 0 | |
Weighted average put price | 0 | |
Weighted average second put price | 0 | |
Weighted average call price | 0 | |
Oil | Two-way collars | 2023 | ||
Derivative Instruments, Gain (Loss) [Line Items] | ||
Hedged volume (Bbl) | bbl | 487,622 | |
Weighted average put price | 52.16 | |
Weighted average call price | 62.94 | |
Oil | Two-way collars | 2024 | ||
Derivative Instruments, Gain (Loss) [Line Items] | ||
Hedged volume (Bbl) | bbl | 475,350 | |
Weighted average put price | 67.88 | |
Weighted average call price | 83.32 | |
Natural Gas | NYMEX Swaps | 2023 | ||
Derivative Instruments, Gain (Loss) [Line Items] | ||
Hedged volume (MMBtu) | MMBTU | 159,890 | |
Weighted average swap price | $ / MMBTU | 2.40 | |
Natural Gas | NYMEX Swaps | 2024 | ||
Derivative Instruments, Gain (Loss) [Line Items] | ||
Hedged volume (MMBtu) | MMBTU | 552,000 | |
Weighted average swap price | $ / MMBTU | 4.61 | |
Natural Gas | Waha basis swaps | 2023 | ||
Derivative Instruments, Gain (Loss) [Line Items] | ||
Hedged volume (MMBtu) | MMBTU | 1,339,685 | |
Weighted average swap price | $ / MMBTU | 0.55 | |
Number of derivative contracts | contract | 2 | |
Natural Gas | Waha basis swaps | 2024 | ||
Derivative Instruments, Gain (Loss) [Line Items] | ||
Hedged volume (MMBtu) | MMBTU | 0 | |
Weighted average swap price | $ / MMBTU | 0 | |
Natural Gas | Two-way collars | Put Option | 2023 | ||
Derivative Instruments, Gain (Loss) [Line Items] | ||
Hedged volume (MMBtu) | MMBTU | 2,258,317 | |
Weighted average put price | $ / MMBTU | 3.18 | |
Natural Gas | Two-way collars | Put Option | 2024 | ||
Derivative Instruments, Gain (Loss) [Line Items] | ||
Hedged volume (MMBtu) | MMBTU | 1,712,250 | |
Weighted average put price | $ / MMBTU | 4 | |
Natural Gas | Two-way collars | Put Option | Forecast | 2023 | ||
Derivative Instruments, Gain (Loss) [Line Items] | ||
Hedged volume (MMBtu) | MMBTU | 236,000 | |
Natural Gas | Two-way collars | Call Option | 2023 | ||
Derivative Instruments, Gain (Loss) [Line Items] | ||
Hedged volume (MMBtu) | MMBTU | 2,140,317 | |
Weighted average call price | $ / MMBTU | 4.89 | |
Natural Gas | Two-way collars | Call Option | 2024 | ||
Derivative Instruments, Gain (Loss) [Line Items] | ||
Hedged volume (MMBtu) | MMBTU | 1,712,250 | |
Weighted average call price | $ / MMBTU | 6.29 | |
Natural Gas | Two-way collars | Call Option | Forecast | 2023 | ||
Derivative Instruments, Gain (Loss) [Line Items] | ||
Hedged volume (MMBtu) | MMBTU | 118,000 |
FAIR VALUE MEASUREMENTS (Detail
FAIR VALUE MEASUREMENTS (Details) - USD ($) | Dec. 31, 2022 | Dec. 31, 2021 |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Derivative Asset, Statement of Financial Position [Extensible Enumeration] | Derivative Asset, Current, Derivative assets | |
Derivative Liability, Statement of Financial Position [Extensible Enumeration] | Derivative Liability, Current, Derivative liabilities | Derivative Liability, Current, Derivative liabilities |
Fair Value, Recurring | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Commodity Derivatives - Assets | $ 10,798,572 | |
Commodity Derivatives - Liabilities | (23,831,269) | $ (29,241,588) |
Total | (13,032,697) | (29,241,588) |
Quoted prices in Active Markets for Identical Assets or (Liabilities) (Level 1) | Fair Value, Recurring | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Commodity Derivatives - Assets | 0 | |
Commodity Derivatives - Liabilities | 0 | 0 |
Total | 0 | 0 |
Significant Other Observable Inputs (Level 2) | Fair Value, Recurring | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Commodity Derivatives - Assets | 10,798,572 | |
Commodity Derivatives - Liabilities | (23,831,269) | (29,241,588) |
Total | (13,032,697) | (29,241,588) |
Significant Unobservable Inputs (Level 3) | Fair Value, Recurring | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Commodity Derivatives - Assets | 0 | |
Commodity Derivatives - Liabilities | 0 | 0 |
Total | $ 0 | $ 0 |
REVOLVING LINE OF CREDIT (Detai
REVOLVING LINE OF CREDIT (Details) | 1 Months Ended | 12 Months Ended | ||
Aug. 31, 2022 USD ($) | Dec. 31, 2022 USD ($) | Dec. 31, 2021 USD ($) | Jul. 01, 2014 USD ($) | |
Line of Credit Facility [Line Items] | ||||
Line of credit facility, maximum borrowing capacity | $ 600,000,000 | $ 1,000,000,000 | ||
Pro forma leverage ratio, maximum threshold | 2 | |||
Borrowing base utilization, maximum threshold, percentage | 80% | |||
Company required to maintaining rolling basis | 24 months | |||
Minimum percentage of projected production to be hedged | 50% | |||
Hedge testing percentage | 0% | |||
Long-term line of credit | $ 415,000,000 | $ 290,000,000 | ||
Unused commitment fee percentage | 0.50% | |||
Unused line of credit | $ 184,239,562 | |||
Base Rate Loans | ||||
Line of Credit Facility [Line Items] | ||||
Interest rate | 0% | |||
Standby Letters of Credit | ||||
Line of Credit Facility [Line Items] | ||||
Long-term line of credit | $ 760,438 | |||
Standby Letters of Credit | State And Federal Agencies | ||||
Line of Credit Facility [Line Items] | ||||
Long-term line of credit | 260,000 | |||
Standby Letters of Credit | New Mexico Insurance Company | Surety Bond | ||||
Line of Credit Facility [Line Items] | ||||
Long-term line of credit | $ 500,438 | |||
Minimum | ||||
Line of Credit Facility [Line Items] | ||||
Current ratio | 1 | |||
Minimum | Base Rate Loans | ||||
Line of Credit Facility [Line Items] | ||||
Debt Instrument, Interest Rate Margin Percentage | 2% | |||
Maximum | ||||
Line of Credit Facility [Line Items] | ||||
Leverage ratio, total | 1.25 | 3 | ||
Utilization of borrowing base rate | 25% | |||
Hedge testing percentage | 25% | |||
Maximum | Base Rate Loans | ||||
Line of Credit Facility [Line Items] | ||||
Debt Instrument, Interest Rate Margin Percentage | 3% | |||
Adjusted term SOFR | Base Rate Loans | ||||
Line of Credit Facility [Line Items] | ||||
Debt instrument, basis spread on variable rate | 1% | |||
Adjusted term SOFR | Minimum | SOFR Loans | ||||
Line of Credit Facility [Line Items] | ||||
Debt instrument, basis spread on variable rate | 3% | |||
Adjusted term SOFR | Maximum | SOFR Loans | ||||
Line of Credit Facility [Line Items] | ||||
Debt instrument, basis spread on variable rate | 4% | |||
Federal Funds Rate | Base Rate Loans | ||||
Line of Credit Facility [Line Items] | ||||
Debt instrument, basis spread on variable rate | 0.50% |
ASSET RETIREMENT OBLIGATION (De
ASSET RETIREMENT OBLIGATION (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Asset Retirement Obligation, Roll Forward Analysis [Roll Forward] | |||
Beginning balance | $ 15,292,054 | $ 17,117,135 | $ 16,787,219 |
Liabilities acquired | 14,538,550 | 662,705 | |
Liabilities incurred | 353,008 | 171,390 | 99,436 |
Liabilities sold | 0 | (2,934,126) | 0 |
Liabilities settled | (940,738) | (904,514) | (710,577) |
Revision of estimate | 0 | 435,419 | 34,441 |
Accretion expense | 983,432 | 744,045 | 906,616 |
Ending balance | $ 30,226,306 | $ 15,292,054 | $ 17,117,135 |
STOCKHOLDERS' EQUITY - Narrativ
STOCKHOLDERS' EQUITY - Narrative (Details) | 1 Months Ended | 12 Months Ended | |||||||||
Oct. 27, 2022 shares | Aug. 31, 2022 shares | Dec. 31, 2021 USD ($) $ / shares shares | Jan. 31, 2021 shares | Oct. 31, 2020 USD ($) $ / shares shares | Apr. 30, 2020 shares | Apr. 30, 2019 shares | Dec. 31, 2022 USD ($) $ / shares shares | Dec. 31, 2021 USD ($) $ / shares shares | Dec. 31, 2020 USD ($) | Feb. 25, 2019 $ / shares | |
Class of Stock [Line Items] | |||||||||||
Common stock, shares authorized (in shares) | 225,000,000 | 225,000,000 | 225,000,000 | ||||||||
Common stock, par value (in dollars per share) | $ / shares | $ 0.001 | $ 0.001 | $ 0.001 | ||||||||
Preferred stock, shares authorized (in shares) | 50,000,000 | 50,000,000 | 50,000,000 | ||||||||
Preferred stock, par value (in dollars per share) | $ / shares | $ 0.001 | $ 0.001 | $ 0.001 | ||||||||
Proceeds from issuance of common stock gross | $ | $ 3,300 | ||||||||||
Proceeds from issuance of common stock, net of offering costs | $ | $ 8,203,126 | $ 367,509 | $ 19,383,131 | ||||||||
Shares issued (in shares) | 52,494 | 100,000 | |||||||||
Wishbone Partners, LLC | |||||||||||
Class of Stock [Line Items] | |||||||||||
Business acquisition, equity interest issued or issuable, number of shares | 4,576,951 | ||||||||||
Business acquisition, share price (in usd per share) | $ / shares | $ 6.19 | ||||||||||
Oil and Natural Gas Assets in Andrews County | |||||||||||
Class of Stock [Line Items] | |||||||||||
Business acquisition, equity interest issued or issuable, value assigned | $ | $ 103,385 | ||||||||||
Stronghold Energy II Operating LLC | |||||||||||
Class of Stock [Line Items] | |||||||||||
Conversion ratio | 277.7778 | ||||||||||
Stronghold Energy II Operating LLC | Common Stock | |||||||||||
Class of Stock [Line Items] | |||||||||||
Business acquisition, equity interest issued or issuable, number of shares | 42,548,892 | 21,339,986 | |||||||||
Stronghold Energy II Operating LLC | Preferred Stock | |||||||||||
Class of Stock [Line Items] | |||||||||||
Business acquisition, equity interest issued or issuable, number of shares | 153,176 | 153,176 | |||||||||
Pre-funded warrants | |||||||||||
Class of Stock [Line Items] | |||||||||||
Common stock, shares authorized (in shares) | 3,300,000 | 3,300,000 | |||||||||
Warrants exercised (in shares) | 13,428,500 | ||||||||||
Common warrants | |||||||||||
Class of Stock [Line Items] | |||||||||||
Warrants exercised (in shares) | 10,253,907 | 442,600 | |||||||||
Class of warrant or right, outstanding (in shares) | 29,361,700 | 19,107,793 | 29,361,700 | ||||||||
Return of common stock issued as consideration in asset acquisition (in shares) | 16,702 | ||||||||||
Public and Private Offerings | |||||||||||
Class of Stock [Line Items] | |||||||||||
Proceeds from issuance of common stock gross | $ | 20,846,282 | ||||||||||
Proceeds from issuance of common stock, net of offering costs | $ | $ 19,379,832 | ||||||||||
Underwritten Public Offering | |||||||||||
Class of Stock [Line Items] | |||||||||||
Stock issued during period, shares, new issues (in shares) | 9,575,800 | ||||||||||
Exercise price of warrants or rights (in usd per share) | $ / shares | $ 0.80 | ||||||||||
Proceeds from issuance of common stock gross | $ | $ 16,089,582 | ||||||||||
Underwritten Public Offering | Pre-funded warrants | |||||||||||
Class of Stock [Line Items] | |||||||||||
Stock issued during period, shares, new issues (in shares) | 13,428,500 | ||||||||||
Underwritten Public Offering | Common warrants | |||||||||||
Class of Stock [Line Items] | |||||||||||
Stock issued during period, shares, new issues (in shares) | 23,004,300 | ||||||||||
Stock and warrants issued during period, purchase price per share (in usd per share) | $ / shares | $ 0.70 | ||||||||||
Warrants and rights outstanding, term | 5 years | ||||||||||
Registered direct offering | |||||||||||
Class of Stock [Line Items] | |||||||||||
Stock issued during period, shares, new issues (in shares) | 3,500,000 | ||||||||||
Warrants and rights outstanding, term | 5 years | ||||||||||
Exercise price of warrants or rights (in usd per share) | $ / shares | $ 0.80 | ||||||||||
Proceeds from issuance of common stock gross | $ | $ 4,756,700 | ||||||||||
Registered direct offering | Pre-funded warrants | |||||||||||
Class of Stock [Line Items] | |||||||||||
Stock issued during period, shares, new issues (in shares) | 3,300,000 | ||||||||||
Stock and warrants issued during period, purchase price per share (in usd per share) | $ / shares | $ 0.70 | ||||||||||
Registered direct offering | Common warrants | |||||||||||
Class of Stock [Line Items] | |||||||||||
Stock issued during period, shares, new issues (in shares) | 6,800,000 |
STOCKHOLDERS' EQUITY - Schedule
STOCKHOLDERS' EQUITY - Schedule of Common Stock Issued in Option Exercise (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Class of Stock [Line Items] | ||
Options exercised (in shares) | 100,000 | 100,000 |
Exercise price (in usd per share) | $ 2 | $ 2 |
Shares issued (in shares) | 52,494 | 100,000 |
Shares retained (in shares) | 47,506 | 0 |
Cash paid at exercise ($) | $ 0 | $ 200,000 |
Stock price on date of exercise (in usd per share) | $ 4.21 | $ 3.14 |
Aggregate value of shares retained ($) | $ 200,000 | $ 0 |
Exercised Option 1 | ||
Class of Stock [Line Items] | ||
Options exercised (in shares) | 100,000 | 100,000 |
Exercise price (in usd per share) | $ 2 | $ 2 |
Shares issued (in shares) | 52,494 | 100,000 |
Shares retained (in shares) | 47,506 | 0 |
Cash paid at exercise ($) | $ 0 | $ 200,000 |
Stock price on date of exercise (in usd per share) | $ 4.21 | $ 3.14 |
Aggregate value of shares retained ($) | $ 200,000 | $ 0 |
EMPLOYEE STOCK OPTIONS, RESTR_3
EMPLOYEE STOCK OPTIONS, RESTRICTED STOCK AWARD PLAN AND 401(k) - Narrative (Details) | 1 Months Ended | 3 Months Ended | 12 Months Ended | 36 Months Ended | |||||
Feb. 09, 2022 executive shares | Nov. 22, 2021 executive shares | Dec. 31, 2019 | Jun. 30, 2020 USD ($) $ / shares shares | Dec. 31, 2021 USD ($) shares | Dec. 31, 2022 USD ($) $ / shares shares | Dec. 31, 2021 USD ($) shares | Dec. 31, 2020 USD ($) shares | Dec. 31, 2022 USD ($) $ / shares shares | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||
Compensation expenses charged against income for share based awards included In general and administrative expenses | $ 7,162,231 | $ 2,418,323 | $ 5,364,162 | ||||||
Share-based compensation | $ 7,162,231 | $ 2,418,323 | $ 5,364,162 | ||||||
Share-based compensation arrangement by share-based payment award, options, exercises in period (in shares) | shares | 100,000 | 100,000 | |||||||
Employer's matching contributions | 6% | ||||||||
Vesting percentage | 100% | ||||||||
Stock options | |||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||
Options returned and cancelled (in shares) | shares | 2,265,000 | ||||||||
Options returned and cancelled, weighted average exercise price (in usd per share) | $ / shares | $ 6.87 | ||||||||
Recognized additional compensation expense | $ 768,379 | ||||||||
Granted (in shares) | shares | 0 | 0 | 0 | ||||||
Options vesting percentage | 20% | ||||||||
Award vesting period | 5 years | ||||||||
Vesting commencement from grant date | 1 year | ||||||||
Options expiration term | 10 years | ||||||||
Share-based compensation | $ 0 | $ 20,934 | $ 927,559 | ||||||
Unrecognized compensation cost | 0 | $ 0 | |||||||
Aggregate intrinsic value | 89,700 | 89,700 | |||||||
Intrinsic value | $ 89,700 | $ 89,700 | |||||||
Per share weighted average price of shares purchased (in usd per share) | $ / shares | $ 2.46 | $ 2.46 | |||||||
Share-based compensation arrangement by share-based payment award, options, exercises in period (in shares) | shares | 100,000 | 100,000 | 0 | ||||||
Share-based compensation arrangement by share-based payment award, options, exercises in period, intrinsic value | $ 221,000 | $ 114,000 | |||||||
Restricted stock units | |||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||
Recognized additional compensation expense | $ 2,361,362 | ||||||||
Accelerated vesting (in shares) | shares | 1,131,955 | ||||||||
Options vesting percentage | 20% | 33% | |||||||
Award vesting period | 5 years | 3 years | |||||||
Vesting commencement from grant date | 1 year | 1 year | |||||||
Share-based compensation | 4,148,639 | $ 2,225,895 | $ 4,436,603 | ||||||
Employee service share-based compensation, nonvested awards, compensation not yet recognized, stock options (in shares) | $ 2,457,386 | $ 2,457,386 | |||||||
Share-based payment arrangement, nonvested award, cost not yet recognized, period for recognition | 1 year 9 months 10 days | ||||||||
Vested (in shares) | shares | 1,310,894 | 785,357 | 1,180,392 | ||||||
Share-based compensation arrangement by share-based payment award, equity instruments other than options, aggregate intrinsic value, vested | $ 3,807,996 | $ 2,049,603 | $ 801,133 | ||||||
Number of shares granted | shares | 1,393,273 | 1,225,656 | 1,980,000 | ||||||
Performance Shares | |||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||
Share-based payment arrangement, nonvested award, cost not yet recognized, period for recognition | 1 year 6 months 21 days | ||||||||
Vested (in shares) | shares | 0 | 0 | |||||||
Number of shares granted | shares | 860,216 | 860,216 | 860,216 | 860,216 | |||||
Number of executive officers | executive | 5 | 5 | |||||||
Share-based compensation expense related to PSU | $ 171,494 | $ 3,013,592 | $ 171,494 | $ 3,013,592 | |||||
Performance stock units | $ 4,037,141 | ||||||||
long term Incentive Plan (2011 Plan) | |||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||
Share-based compensation arrangement by share-based payment award, number of shares available for grant | shares | 341,755 | 341,755 | |||||||
Omnibus Incentive Plan (2021 Plan) | |||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||
Share-based compensation arrangement by share-based payment award, number of shares available for grant | shares | 5,591,224 | 5,591,224 |
EMPLOYEE STOCK OPTIONS, RESTR_4
EMPLOYEE STOCK OPTIONS, RESTRICTED STOCK AWARD PLAN AND 401(k) - Status of the Stock Options (Details) - $ / shares | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Options | |||
Exercised (in shares) | (100,000) | (100,000) | |
Outstanding at end of year (in shares) | 265,500 | ||
Options Exercisable at end of year (in shares) | 265,500 | ||
Weighted- Average Exercise Price | |||
Exercised (in usd per share) | $ 2 | $ 2 | |
Stock options | |||
Options | |||
Outstanding at beginning of the year (in shares) | 365,500 | 465,500 | 2,748,500 |
Issued (in shares) | 0 | 0 | 0 |
Forfeited or rescinded (in shares) | 0 | 0 | (2,283,000) |
Exercised (in shares) | (100,000) | (100,000) | 0 |
Outstanding at end of year (in shares) | 265,500 | 365,500 | 465,500 |
Options Exercisable at end of year (in shares) | 265,500 | 365,500 | 455,300 |
Weighted- Average Exercise Price | |||
Outstanding at beginning of the year (in usd per share) | $ 3.61 | $ 3.26 | $ 6.28 |
Issued (in usd per share) | 0 | 0 | 0 |
Forfeited or rescinded (in usd per share) | 0 | 0 | 6.89 |
Exercised (in usd per share) | 2 | 2 | 0 |
Outstanding at end of year (in usd per share) | 4.21 | 3.61 | 3.26 |
Exercisable at end of year (in usd per share) | $ 4.21 | $ 3.61 | $ 3.11 |
EMPLOYEE STOCK OPTIONS, RESTR_5
EMPLOYEE STOCK OPTIONS, RESTRICTED STOCK AWARD PLAN AND 401(k) - Stock Options Outstanding (Details) | 12 Months Ended |
Dec. 31, 2022 $ / shares shares | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Options Outstanding - Number Outstanding (in shares) | 265,500 |
Options Outstanding - Weighted-Average Remaining Contractual Life (in years) | 1 year 7 months 17 days |
Options Outstanding - Number Exercisable (in shares) | 265,500 |
Exercise Price One | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Options Outstanding - Exercise price (in usd per share) | $ / shares | $ 2 |
Options Outstanding - Number Outstanding (in shares) | 195,000 |
Options Outstanding - Weighted-Average Remaining Contractual Life (in years) | 1 year |
Options Outstanding - Number Exercisable (in shares) | 195,000 |
Exercise Price Two | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Options Outstanding - Exercise price (in usd per share) | $ / shares | $ 5.50 |
Options Outstanding - Number Outstanding (in shares) | 5,000 |
Options Outstanding - Weighted-Average Remaining Contractual Life (in years) | 1 year 2 months 15 days |
Options Outstanding - Number Exercisable (in shares) | 5,000 |
Exercise Price Three | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Options Outstanding - Exercise price (in usd per share) | $ / shares | $ 14.54 |
Options Outstanding - Number Outstanding (in shares) | 10,000 |
Options Outstanding - Weighted-Average Remaining Contractual Life (in years) | 2 years 8 months 26 days |
Options Outstanding - Number Exercisable (in shares) | 10,000 |
Exercise Price Four | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Options Outstanding - Exercise price (in usd per share) | $ / shares | $ 8 |
Options Outstanding - Number Outstanding (in shares) | 4,500 |
Options Outstanding - Weighted-Average Remaining Contractual Life (in years) | 2 years 11 months 1 day |
Options Outstanding - Number Exercisable (in shares) | 4,500 |
Exercise Price Five | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Options Outstanding - Exercise price (in usd per share) | $ / shares | $ 6.42 |
Options Outstanding - Number Outstanding (in shares) | 15,000 |
Options Outstanding - Weighted-Average Remaining Contractual Life (in years) | 3 years 4 months 2 days |
Options Outstanding - Number Exercisable (in shares) | 15,000 |
Exercise Price Six | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Options Outstanding - Exercise price (in usd per share) | $ / shares | $ 11.75 |
Options Outstanding - Number Outstanding (in shares) | 36,000 |
Options Outstanding - Weighted-Average Remaining Contractual Life (in years) | 3 years 11 months 12 days |
Options Outstanding - Number Exercisable (in shares) | 36,000 |
EMPLOYEE STOCK OPTIONS, RESTR_6
EMPLOYEE STOCK OPTIONS, RESTRICTED STOCK AWARD PLAN AND 401(k) - Restricted Stock Grants (Details) | 12 Months Ended |
Dec. 31, 2022 shares | |
October 1, 2020 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Number of shares granted | 900,000 |
October 26, 2020 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Number of shares granted | 150,000 |
December 15, 2020 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Number of shares granted | 930,000 |
April 30, 2021 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Number of shares granted | 33,950 |
June 17, 2021 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Number of shares granted | 1,162,152 |
July 6, 2021 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Number of shares granted | 11,824 |
July 12, 2021 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Number of shares granted | 4,007 |
September 1, 2021 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Number of shares granted | 10,417 |
September 8, 2021 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Number of shares granted | 3,306 |
February 9, 2022 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Number of shares granted | 1,247,061 |
April 13, 2022 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Number of shares granted | 7,143 |
May 10, 2022 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Number of shares granted | 10,349 |
June 16, 2022 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Number of shares granted | 2,150 |
June 14, 2022 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Number of shares granted | 8,547 |
August 29, 2022 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Number of shares granted | 30,581 |
September 1, 2022 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Number of shares granted | 37,797 |
September 19, 2022 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Number of shares granted | 49,645 |
EMPLOYEE STOCK OPTIONS, RESTR_7
EMPLOYEE STOCK OPTIONS, RESTRICTED STOCK AWARD PLAN AND 401(k) - Status of Restricted Stock and Performance Shares Grants (Details) - $ / shares | 12 Months Ended | ||||
Feb. 09, 2022 | Nov. 22, 2021 | Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Restricted stock units | |||||
Share-Based Compensation Arrangement by Share-Based Payment Award, Equity Instruments Other than Options, Nonvested, Number of Shares | |||||
Outstanding at beginning of the year (in shares) | 2,572,596 | 2,132,297 | 1,341,889 | ||
Granted (in shares) | 1,393,273 | 1,225,656 | 1,980,000 | ||
Forfeited or rescinded (in shares) | (31,185) | 0 | (9,200) | ||
Vested (in shares) | (1,310,894) | (785,357) | (1,180,392) | ||
Outstanding at end of year (in shares) | 2,623,790 | 2,572,596 | 2,132,297 | ||
Weighted- Average Grant Date Fair Value | |||||
Outstanding at beginning of the year (in usd per share) | $ 1.75 | $ 2.94 | $ 4.99 | ||
Granted (in usd per share) | 2.83 | 2.77 | 0.71 | ||
Forfeited or rescinded (in usd per share) | 2.83 | 0 | 3.97 | ||
Vested (in usd per share) | 1.79 | 1.37 | 4.97 | ||
Outstanding at end of year (in usd per share) | $ 2.29 | $ 1.75 | $ 2.94 | ||
Performance Shares | |||||
Share-Based Compensation Arrangement by Share-Based Payment Award, Equity Instruments Other than Options, Nonvested, Number of Shares | |||||
Outstanding at beginning of the year (in shares) | 860,216 | 0 | |||
Granted (in shares) | 860,216 | 860,216 | 860,216 | 860,216 | |
Forfeited or rescinded (in shares) | 0 | 0 | |||
Vested (in shares) | 0 | 0 | |||
Outstanding at end of year (in shares) | 1,720,432 | 860,216 | 0 | ||
Weighted- Average Grant Date Fair Value | |||||
Outstanding at beginning of the year (in usd per share) | $ 3.87 | $ 0 | |||
Granted (in usd per share) | 3.65 | 3.87 | |||
Forfeited or rescinded (in usd per share) | 0 | 0 | |||
Vested (in usd per share) | 0 | 0 | |||
Outstanding at end of year (in usd per share) | $ 3.76 | $ 3.87 | $ 0 |
EMPLOYEE STOCK OPTIONS, RESTR_8
EMPLOYEE STOCK OPTIONS, RESTRICTED STOCK AWARD PLAN AND 401(k) - Contributions Expense Recognized (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
EMPLOYEE STOCK OPTIONS, RESTRICTED STOCK AWARD PLAN AND 401(k) | |||
Employer safe harbor match | $ 284,094 | $ 228,273 | $ 138,997 |
EMPLOYEE STOCK OPTIONS, RESTR_9
EMPLOYEE STOCK OPTIONS, RESTRICTED STOCK AWARD PLAN AND 401(k) - Performance Stock Units (Details) - Performance Shares - USD ($) | 12 Months Ended | |||
Feb. 09, 2022 | Nov. 22, 2021 | Dec. 31, 2022 | Dec. 31, 2021 | |
Share-Based Compensation Arrangement by Share-Based Payment Award, Equity Instruments Other than Options, Nonvested, Number of Shares | ||||
Outstanding at beginning of the year (in shares) | 860,216 | 0 | ||
Granted (in shares) | 860,216 | 860,216 | 860,216 | 860,216 |
Forfeited or rescinded (in shares) | 0 | 0 | ||
Vested (in shares) | 0 | 0 | ||
Outstanding at end of year (in shares) | 1,720,432 | 860,216 | ||
Outstanding at beginning of the year (in usd per share) | $ 3.87 | $ 0 | ||
Granted (in usd per share) | 3.65 | 3.87 | ||
Forfeited or rescinded (in usd per share) | 0 | 0 | ||
Vested (in usd per share) | 0 | 0 | ||
Outstanding at end of year (in usd per share) | $ 3.76 | $ 3.87 | ||
Share-based compensation expense related to PSU | $ 3,013,592 | $ 171,494 | ||
Unrecognized compensation cost related to PSU | $ 4,037,141 | |||
Share-based payment arrangement, nonvested award, cost not yet recognized, period for recognition | 1 year 6 months 21 days |
RELATED PARTY TRANSACTIONS - Ad
RELATED PARTY TRANSACTIONS - Additional Information (Details) - USD ($) | 12 Months Ended | |||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2022 | Jun. 30, 2021 | |
Board Of Directors Chairman And Director | Arenaco | ||||
Related Party Transaction [Line Items] | ||||
Related party transaction expense | $ 10,000 | $ 60,000 | ||
Board Of Directors Chairman And Chief Executive Officer | PJ Chemicals | ||||
Related Party Transaction [Line Items] | ||||
Ownership percentage | 0.34% | |||
Board Of Directors Chairman And Chief Executive Officer | PJ Chemicals | ||||
Related Party Transaction [Line Items] | ||||
Related party transaction expense | $ 117,830 | |||
Accounts payable | $ 37,641 |
COMMITMENTS AND CONTINGENT LI_2
COMMITMENTS AND CONTINGENT LIABILITIES - Narrative (Details) - USD ($) | 12 Months Ended | |||
Dec. 23, 2022 | Dec. 31, 2022 | Aug. 31, 2022 | Jul. 01, 2014 | |
Loss Contingencies [Line Items] | ||||
Line of credit facility, maximum borrowing capacity | $ 600,000,000 | $ 1,000,000,000 | ||
Surety bonds, amount released | $ 50,150 | |||
Surety Bond | ||||
Loss Contingencies [Line Items] | ||||
Issued surety bonds | $ 650,288 | |||
Extended term for surety bonds | 1 year | |||
Surety bonds renewal amount | $ 400,000 | |||
Surety bonds renewal amount, not applicable | 100,438 | |||
Amount of surety bonds related to inactive wells | 50,288 | |||
Surety bond increase | $ 200,000 | |||
Surety Bond | NEW MEXICO | ||||
Loss Contingencies [Line Items] | ||||
Issued surety bonds | 500,438 | |||
Standby Letters of Credit | ||||
Loss Contingencies [Line Items] | ||||
Standby letters of credit drawn | 0 | |||
State And Federal Agencies | Standby Letters of Credit | ||||
Loss Contingencies [Line Items] | ||||
Line of credit facility, maximum borrowing capacity | $ 260,000 | |||
Extended term under letter of credit arrangement (in years) | 1 year | |||
Electric Utility Companies | Standby Letters of Credit | ||||
Loss Contingencies [Line Items] | ||||
Line of credit facility, maximum borrowing capacity | $ 500,438 |
INCOME TAXES - Provision for In
INCOME TAXES - Provision for Income Taxes (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Provision for Income Taxes | |||
Federal deferred tax | $ 6,437,680 | $ 0 | $ (6,001,176) |
State deferred tax | 1,971,044 | 90,342 | 0 |
Provision for (Benefit From) Income Taxes | $ 8,408,724 | $ 90,342 | $ (6,001,176) |
INCOME TAXES - Reconciliation o
INCOME TAXES - Reconciliation of Income Taxes (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Rate Reconciliation | |||
Pre-tax book income (loss) | $ 147,043,749 | $ 3,413,234 | $ (259,413,004) |
Tax at federal statutory rate | 30,879,187 | 716,779 | (54,476,731) |
Excess tax benefit from stock option exercises and restricted stock vesting | (312,268) | (175,187) | (1,109,379) |
Adjust prior estimates to tax return | 214,740 | 2,938,948 | (1,930,994) |
States taxes, net of federal benefit | 1,443,145 | 430,654 | (964,393) |
Valuation allowance | (24,151,242) | (3,827,194) | 52,161,412 |
Non-deductible expenses and other | 335,162 | 6,342 | 318,909 |
Provision for (Benefit From) Income Taxes | $ 8,408,724 | $ 90,342 | $ (6,001,176) |
INCOME TAXES - Net Deferred Tax
INCOME TAXES - Net Deferred Taxes (Details) - USD ($) | Dec. 31, 2022 | Dec. 31, 2021 |
Deferred Tax Assets | ||
Net operating loss (NOL) carryforward | $ 70,564,004 | $ 60,155,112 |
Equity compensation | 1,554,680 | 691,076 |
Asset retirement obligation | 6,635,099 | 3,348,875 |
Fair market value of derivatives | 2,827,202 | 6,403,745 |
Deferred Tax Asset, Interest Carryforward | 4,917,358 | 0 |
Others | 1,173,441 | 61,077 |
Gross Deferred Tax Assets | 87,671,784 | 70,659,885 |
Less: valuation allowance | (24,182,975) | (48,334,217) |
Net Deferred Tax Assets | 63,488,809 | 22,325,668 |
Deferred Tax Liabilities | ||
Property and equipment | (71,402,820) | (22,415,959) |
Other | (585,005) | 0 |
Net Deferred Liabilities | 71,987,825 | 22,415,959 |
Net Deferred Tax Liabilities | $ (8,499,016) | $ (90,292) |
INCOME TAXES - Narrative (Detai
INCOME TAXES - Narrative (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Income Tax Disclosure [Abstract] | |||
Company had net operating loss carry forwards for federal income tax reporting purposes of approximately in millions | $ 109,300,000 | ||
Operating loss carry forwards that will not expire | 225,100,000 | ||
Valuation allowance | 24,182,975 | $ 48,334,217 | |
Federal deferred tax | 6,437,680 | $ 0 | $ (6,001,176) |
State deferred tax liability | $ 2,061,336 |
LEGAL MATTERS (Details)
LEGAL MATTERS (Details) - USD ($) | Dec. 31, 2022 | Dec. 31, 2020 |
LEGAL MATTERS. | ||
Non-refundable deposits | $ 5,500,000 | $ 5,500,000 |
SUBSEQUENT EVENTS (Details)
SUBSEQUENT EVENTS (Details) - USD ($) | 12 Months Ended | ||||||
Mar. 01, 2023 | Feb. 28, 2023 | Feb. 02, 2023 | Aug. 31, 2022 | Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Subsequent Event [Line Items] | |||||||
Proceeds from issuance of common stock | $ 8,203,126 | $ 367,509 | $ 19,383,131 | ||||
Stronghold Acquisition | |||||||
Subsequent Event [Line Items] | |||||||
Cash consideration | $ 168,661,644 | ||||||
Subsequent Event | |||||||
Subsequent Event [Line Items] | |||||||
Number of shares issued from exercise of warrants (in shares) | 2,000,000 | 2,517,427 | |||||
Exercise price of warrants or rights (in usd per share) | $ 0.80 | $ 0.80 | |||||
Proceeds from issuance of common stock | $ 1,600,000 | $ 2,013,942 | |||||
Subsequent Event | Stronghold Acquisition | |||||||
Subsequent Event [Line Items] | |||||||
Cash consideration | $ 15,000,000 | ||||||
Escrow deposit disbursement | $ 8,300,000 |