December 26, 2018
William R. Broaddrick
Chief Financial Officer
Ring Energy, Inc.
901 West Wall St, 3rd Floor
Midland, TX, 79702
Re: Ring Energy, Inc.
Form 10-K for the Fiscal Year ended December 31, 2017
Filed March 15, 2018
File No. 001-36057
Dear Mr. Broaddrick:
We have limited our review of your filing to the financial statements
and related
disclosures and have the following comments. In some of our comments, we may
ask you to
provide us with information so we may better understand your disclosure.
Please respond to these comments within ten business days by providing
the requested
information or advise us as soon as possible when you will respond. If you do
not believe our
comments apply to your facts and circumstances, please tell us why in your
response.
After reviewing your response to these comments, we may have additional
comments.
Form 10-K for the Fiscal Year ended December 31, 2017
Properties
Proved Undeveloped Reserves, page 17
1. Expand your disclosure to discuss the investments and progress made
during the year to
convert proved undeveloped reserves to proved developed reserves,
including, but not
limited, to the capital expenditures incurred during the year. Also
resolve the apparent
inconsistency in the figures for the "future capital expenditures" and
the "estimated
development costs" presented page 18. Refer to Item 1203(c) of Regulation
S-K.
Internal Controls Over Reserves Estimates, page 18
2. If you represent that your reserves were prepared or audited by third
party independent
consultants, you must additionally disclose the qualifications of the
technical person
within each of the third party engineering firms, e.g. Cawley, Gillespie
& Associates, Inc.
and Williamson Petroleum Consultants, Inc., primarily responsible for
overseeing the
William R. Broaddrick
FirstName LastNameWilliam R. Broaddrick
Ring Energy, Inc.
Comapany26, 2018 Energy, Inc.
December NameRing
December 26, 2018 Page 2
Page 2
FirstName LastName
preparation of such estimates. Refer to the requirements pursuant to
Item 1202(a)(7) of
Regulation S-K.
Acreage, page 19
3. Expand your disclosure to provide the expiration dates of material
amounts of
undeveloped acreage. Refer to Item 1208(b) of Regulation S-K.
4. Tell us the extent to which you have assigned any proved undeveloped
reserves to
locations which are currently scheduled to be drilled after lease
expiration. If there are
material quantities of net proved undeveloped reserves relating to
such locations, expand
your disclosure to identify the number of locations, the related net
reserve quantities and
the steps which would be necessary to extend the time to the
expiration of such leases.
Refer to Rule 4-10(a)(26) of Regulation S-X
Production History, page 19
5. Tell us how you considered the requirements with regard to disclosure
of production, by
final product sold, for each individual field that contains 15% or
more of your total proved
reserves. Refer to Item 1204(a) of Regulation S-K and Rule 4-10(a)(15)
of Regulation S-
X.
Drilling Activity, page 20
6. Expand your disclosure to additionally provide the total number of net
development wells
drilled, the total number of net exploratory wells drilled and the
extent that you drilled any
dry development and/or exploratory wells. Refer to Item 1205 of
Regulation S-K. Also
modify your use of the term "science wells" to conform your disclosure
to one of the well
types identified in Item 1205(b)(2) of Regulation S-K or in Rule
4-10(a) of Regulation S-
X.
7. Expand the disclosure of your drilling activities to additionally
discuss your present
activities, such as the number of wells in the process of being
drilled (including wells
temporarily suspended), waterfloods in the process of being installed,
pressure
maintenance operations, and any other related activities of material
importance subsequent
to the fiscal year-end. Refer to Item 1206 of Regulation S-K.
Financial Statements
Notes to Financial Statements
Note 13 - Income Taxes, page F-20
8. We note you reported losses for the years ended December 31, 2017 and
December 31,
2016, and that you reported cumulative losses for the three year
periods ended December
31, 2017 and December 31, 2016. In view of these factors, explain to
us your basis for
recognizing a net deferred tax asset as of December 31, 2017 and
December 31, 2016. As
part of you response, explain to us how you considered the guidance in
FASB ASC
William R. Broaddrick
FirstName LastNameWilliam R. Broaddrick
Ring Energy, Inc.
Comapany26, 2018 Energy, Inc.
December NameRing
December 26, 2018 Page 3
Page 3
FirstName LastName
paragraphs 740-10-30-2(b), 740-10-30-17, 740-10-30-21 and
740-10-30-23.
Supplemental Information on Oil and Gas Producing Activities (Unaudited)
Reserves Quantities Information, page F-22
9. Expand your tabular presentation of proved reserves to additionally
provide the separate
disclosure of the net quantities by product type of proved undeveloped
reserves at the
beginning and end of each period presented. Refer to the illustration
in Example 1 of
FASB ASC 932-235-50-2. Also resolve the apparent inconsistency in the
figures
disclosed as proved developed reserves at the end of 2016 with the
comparable estimates
provided elsewhere on page 16. Refer to the disclosure requirements
for proved
developed and proved undeveloped reserves under FASB ASC 932-235-50-4.
10. The disclosure of the changes in your proved reserves appears to
combine changes from
two separate and unrelated causes into a single line item entry, e.g.
improved recovery and
extensions and discoveries. Refer to the description of the change
categories under FASB
ASC 932-235-50-5 and revise your disclosure to clearly and separately
address each
required change category. This comment also applies to the comparable
disclosure of the
changes in your proved undeveloped reserves provided on page 17.
11. Expand your disclosure to provide an explanation of the significant
changes related to
each line item entry other than production. To the extent that two or
more unrelated
factors are combined to arrive at the line item figure, your
disclosure should separately
identify and quantify each individual factor that contributed to a
significant change so that
the change in net reserves between periods is fully explained. The
disclosure relating to
revisions in the previous estimates of your reserves should identify
such factors as
changes caused by commodity prices, well performance, uneconomic
proved undeveloped
locations or changes resulting from the removal of proved undeveloped
locations due to
changes in a previously adopted development plan. Refer to FASB ASC
932-235-50-5.
Exhibits, Financial Statement Schedule
Exhibit Number 99.1, page 47
12. The reserve report that you have filed does not include certain
information required by
Item 1202(a)(8) of Regulation S-K. Please obtain and file a revised
report that includes
the following information.
A statement that the assumptions, data, methods, and procedures
are appropriate for
the purpose served by the report (Item 1202(a)(8)(iv)).
An explanation of the types of costs represented under the line
item entry "Other
Deductions" shown in the tabular shown in the tabular presentation
of the results of
the audit as part of the primary economic assumptions (Item
1202(a)(8)(v)).
William R. Broaddrick
FirstName LastNameWilliam R. Broaddrick
Ring Energy, Inc.
Comapany26, 2018 Energy, Inc.
December NameRing
December 26, 2018 Page 4
Page 4
FirstName LastName
Exhibit Number 99.2, page 47
13. The reserve report that you have filed does not include certain
information required by
Item 1202(a)(8) of Regulation S-K. Please obtain and file a revised
report that includes
the following information.
The assumptions, data, methods and procedures used in connection
with the
preparation of the report, including a statement that the
assumptions, data, methods,
and procedures are appropriate for the purpose served by the
report (Item
1202(a)(8)(iv)).
A discussion of the primary economic assumptions, including
initial benchmark and
volume weighted average realized prices after adjustments for
location and quality
differentials, by product type including natural gas liquids, for
the reserves included in
the report (Item 1202(a)(8)(v)).
A discussion of the possible effects of regulation on the ability
of the Company to
recover the estimated reserves (Item 1202(a)(8)(vi)).
A discussion of the inherent uncertainties of reserves estimates
(Item 1202(a)(8)(viii)).
A statement that the third party has used all procedures as it
considered necessary
under the circumstances to prepare the report (Item
1202(a)(8)(viii)).
14. The reserve report refers to additional supplemental information that
is not included with
the report, e.g. "Definitions" that describe all categories of
reserves and a "Discussion"
that describes the basis of the evaluation. Obtain and file a revised
report to include the
referenced supplemental information. Alternatively, remove the
reference if you do not
intend to include this supplemental information.
General
15. We note your website www.ringenergy.com contains links to various news
releases of
your quarterly results. However, you do not appear to have furnished
this information on
Form 8-K. Explain to us how you have considered the requirements of
Item 2.02 of Form
8-K.
In closing, we remind you that the company and its management are
responsible for the
accuracy and adequacy of their disclosures, notwithstanding any review,
comments, action or
absence of action by the staff.
William R. Broaddrick
Ring Energy, Inc.
December 26, 2018
Page 5
You may contact Joseph Klinko, Staff Accountant, at (202) 551-3824 or
Brad Skinner,
Senior Assistant Chief Accountant at (202) 551-3489 if you have questions
regarding comments
on the financial statements and related matters. For questions regarding
comments on
engineering matters, you may contact John Hodgin, Petroleum Engineer, at (202)
551-3699.
FirstName LastNameWilliam R. Broaddrick Sincerely,
Comapany NameRing Energy, Inc.
Division of
Corporation Finance
December 26, 2018 Page 5 Office of Natural
Resources
FirstName LastName