Good morning, and welcome to today's conference to discuss Ring Energy's acquisition of the assets owned and operated by Stronghold Energy II. Should you need assistance, please signal conference specialist by pressing the star key followed by zero. At this time, all participants will be in a listen-only mode. A question-and-answer session will follow after the formal presentation. To ask a question, you may press star then one on your touch tone phone, and to withdraw your question, please press star then two. Please note this event is being recorded. I would now like to turn the conference over to Al Petrie, Investor Relations for Ring Energy. Please go ahead, sir. Thank you, Chuck, and good morning, everyone. We appreciate your interest in Ring Energy. On today's call, Paul McKinney, our Chairman and CEO, will discuss the company's transformational and immediately accretive acquisition of Stronghold's assets and Central Basin Platform. We will then open up the call for questions. Joining us on the call today and available for the Q&A session are Travis Thomas, Executive Vice President and Chief Financial Officer, Alex Dyes, Executive VP of Engineering and Corporate Strategy, Marinos Baghdati, Executive VP of Operations, and Steve Brooks, Executive VP of Land, Legal, Human Resources and Marketing. During the Q&A session, we ask you to limit your questions to one and a follow-up. You're welcome to re-enter the queue later with additional questions. I would also note that we have posted a presentation on our website that we will use during today's call to discuss the transaction. During the course of this conference call, the company will be making forward-looking statements within the meaning of federal securities laws. Investors are cautioned that forward-looking statements are not guarantees of future performance, and actual results or developments may differ materially from those projected in the forward-looking statements. The company can give no assurance that such forward-looking statements will prove to be correct. Ring Energy disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise. Accordingly, you should not place undue reliance on forward-looking statements. These and other risks are described in today's press release and in our filings with the Securities and Exchange Commission. These documents can be found in the investor section of our website, which is www.ringenergy.com. Should one or more of these risks materialize or should underlying assumptions prove incorrect, actual results may differ materially. In addition, today's conference call will include references to certain non-GAAP financial measures, including adjusted EBITDA, free cash flow, and others. Finally, as a reminder, this conference call is being recorded. I would now like to turn the call over to Paul McKinney, our Chairman and CEO. Thank you, Al. Welcome, everyone. We appreciate you joining us today to discuss the plans we announced this morning to acquire the Permian Basin assets of Stronghold Energy II. We believe this will be a transformational acquisition that will create both immediate and long-term value for Ring shareholders. As Al mentioned, we have posted a presentation on our website that we will use to help guide our discussion. Starting with slide two, I encourage you to read the information we provide concerning forward-looking statements and cautionary notes. That information is very important. Now turning to slide three. Here, we provide a high-level overview of the financial and operational benefits this acquisition is expected to provide Ring's existing shareholders. It increases our future free cash flow and substantially enhances our size and scale, making us more relevant to a broader cross-section of potential investors. It also strengthens our balance sheet, and with the increased free cash flow, we expect to be able to accelerate debt repayment. Additionally, and very important might I add, this acquisition is expected to improve our already low break-even cost. More on this benefit a little later. Another important aspect of this deal is that it is immediately accretive across key metrics, including cash flow per share, free cash flow per share, free cash flow yield, net production per share, and net proved reserves per share. It also brings with it low per BOE operating costs that substantially enhances free cash flow generation and cash margins. With respect to size and scale, completing this transaction should nearly double our production, reserves, projected free cash flow, and adjusted EBITDA, and substantially increases the inventory of high-return projects. Now, turning to slide four. Here, we provide a purchase price and funding overview. Consideration subject to customary purchase price adjustments consists of $200 million in cash at closing, $15 million deferred cash payment due six months after closing. The assumption of $20 million of existing Stronghold hedge liabilities, and $230 million in Ring Energy stock issued to the owners of Stronghold, which includes $76.8 million in common stock that equates to approximately 21.3 million shares, and $153.2 million in convertible preferred stock, which will be converted to approximately 42.5 million shares of common stock upon stockholder approval to the conversion. The value for the common stock and the basis for the conversion of the preferred stock is a 20-day volume weighted average price of $3.60 as of June 30th, 2022. The cash portion of the consideration will be funded primarily from borrowings under a fully committed revolving credit facility underwritten by Truist Securities, Citizens Securities, KeyBanc Capital Markets, and Mizuho Securities. The borrowing base of the company's $1 billion credit facility will be increased from $350 million to $600 million upon closing of the transaction, improving our liquidity and lowering our leverage ratio. The effective date of the transaction is June 1, 2022, and closing is currently anticipated in the third quarter of this year. Following closing, Ring's existing shareholders will own approximately 66% of pro forma Ring, while Stronghold's owners will own approximately 34% and become the company's largest shareholder. Turning now to slide five. Here we provide select standalone and pro forma metrics which clearly show the transformational nature of the acquisition. The transaction firmly establishes Ring as a premier operator and consolidator of choice in the region and will leverage our enhanced free cash flow profile to accelerate the repayment of debt. We expect a step change in our operating and financial metrics, including sales volumes, proved developed reserves, and free cash flow, essentially doubling from where we are on a standalone basis. Supporting the increase is a material growth in total proved reserves of about 80%, which includes an increase of approximately 90% for the proved developed reserves. Now turning to slide six. You can see the impact for our shareholders on the key per-share metrics of this transaction. Cash flow per share is expected to increase 15%. Free cash flow per share is up over 200%. Production per share up over 30%, reserves per share up over 25%, and free cash flow yield is expected to be up over 200%. Notably accretive increases across the board, this acquisition is expected to significantly increase shareholder value. Now let's discuss the assets. Turning to slide seven. The operational highlights of the Stronghold assets start with the high-quality conventional PDP production base characterized by high operating margins, shallow declines, and long-life proved reserves. Current production is approximately 9,100 bbl of oil equivalent per day, with approximately 54% oil and 75% liquids from approximately 605 producing wells. The map on this page indicates where our acreage is with respect to Stronghold's acreage, which is primarily in Crane County, with acreage also in Ector, Winkler, and Ward counties. Stronghold's acreage consists of approximately 37,000 net acres, including 31,000 acres of leasehold and 6,000 acres of mineral, that are approximately 99% operated, 99% working interest, and 99% held by production. The acreage is characterized by high net revenue interest, including approximately 88% oil net revenue interest and 96% natural gas net revenue interest, primarily for all depths. Stronghold assets also include a meaningful inventory of over 500 vertical drilling and recompletion locations with short cycle times and high rates of return. These opportunities have strong economics and are accretive from a capital efficiency standpoint, allowing us the opportunity to optimize our future capital spending program even further to enhance free cash flow and accelerate paying down debt. The acquisition of Stronghold is a step change in our overall reserves, PV-10 value and inventory. Turning now to slide eight, you can see that our reserves and PV-10 values will meaningfully increase with this acquisition, bringing our combined total proved reserves to approximately 144 MMbbl of oil equivalent and the associated PV-10 value using June 2021 NYMEX strip pricing to over $2.6 billion. The stratigraphic column on the right depicts the nature of the high-quality stack pays characteristic of this area of the Central Basin Platform, and the rendering of the modern completion methods gives you a depiction of the technologies that are reawakening this area of the CBP. These assets provide attractive cash flow profile that is meaningfully beneficial for Ring's existing shareholders, which is supported by low break-even drilling economics of approximately $20-$25 per barrel of oil. Excuse me. Low operating costs of approximately $8.25-$8.75 per barrel of oil. The result will be a significant improvement in cash flow generation. We anticipate that these assets will generate $36 million-$38 million in adjusted EBITDA for this year's fourth quarter alone. Now turning to slide nine. Here we summarize other details of the transaction. Ring's board of directors unanimously approved the transaction, which is subject to customary closing conditions, including regulatory approvals. The effective date of the acquisition, as I said earlier, is June 1, 2022, and the anticipated closing date is expected in this year's third quarter. We intend to hold a special stockholders meeting to approve conversion of the preferred stock to common stock. Additionally, two Warburg directors will be joining the existing Ring board of directors at closing and look forward to our newly formed partnership. The existing management team will remain in place, and the corporate headquarters will remain in The Woodlands, Texas. Turning to slide 10. I want to remind you of what we have consistently said about our strategy. We have been pursuing accretive acquisitions that increase our size and scale, lower our break-even costs, and strengthen our balance sheet. We have also said that if we use equity, we would ensure that any transaction we complete would be accretive to our existing shareholders. This transaction will clearly demonstrate the virtues of our strategy, and not only will it make Ring bigger, it will make us better. With that, I will turn the call back over to Chuck, and we look forward to answering your questions. Chuck? Thank you. We will now begin the question-and-answer session. To ask a question, you may press star then one on your touch-tone phone. If you're using a speakerphone, please pick up your handset before pressing the keys. To withdraw your question, please press star then two. At this time, we'll pause momentarily to assemble our roster. The first question will come from Jeffrey Campbell with Alliance Global Partners. Please go ahead. Good morning, and congratulations on the acquisition. Thank you... [crosstalk] Jeff. A couple of real quick ones, and then I'd like to ask one more if I could. Based on slide four, it appears that Stronghold didn't bring any debt, balance sheet debt. Is that correct? Well, this is an asset acquisition, and so, yeah, we're buying the assets free of the debt, yes. Okay, great. Are there any lockouts on the Stronghold's acquired REI equity? Yes, there is a lock-up agreement that is part of the purchase and sale agreement. Can you give us some idea of what the metrics are on that? Yeah. The lock-up agreement for Warburg and affiliates of Warburg is 90 days. Mm-hmm. Other recipients of that stock are locked up for 60 days that are non-Warburg affiliates. Okay, got it. All right, the last question I'll ask, and I'll get back in the queue. You, Paul, you highlighted the vertical drilling, and I noticed that as well on slide seven and eight. Just wondered why the vertical approach is preferable to horizontal drilling on the Stronghold acreage? Well, there's a couple things. In this area with all the stack pays, horizontal drilling is not a very effective development technology associated with, you know, recovering resource from all those different layers. In this area, the vertical wells are considerably less expensive and applying newer completion technologies to these older areas of stack pay has allowed us to improve the economics to the point that they actually rival the economics that we have in the Northwest Shelf and Central Basin Platform where we're drilling horizontal wells. Okay, great. All right; I'll get back in the queue. Thanks. Yep. The next question will come from Neal Dingmann with Truist. Please go ahead. Morning, guys. Congrats as well. Paul, can you talk about... [crosstalk] Thanks, Neal. I see in the slides a bit, can you just talk about as far as activity-wise, what you're thinking for the remainder of this year, rigs, frac spread on the new versus any thoughts to would this cause you to change activity, existing activity on the predecessor, you know, your as-acquired assets as well? Maybe just talk about how you see the overall, maybe talk about rig frac schedule maybe for the remainder of the year into 2023. Yeah, I'll go ahead. Thank you, Neil. I'll make a stab at that, and I'll turn this over to Marino as well. Stronghold had a rig running earlier on this acreage this year. The results of that capital spending program that they had, they initiated, demonstrated strong production increasing results. It was just incredible actually. However, there's not a rig running now. We are currently evaluating the combined portfolio. Until the transaction is complete, we'll continue with our drilling program as we have stated it. We may very well continue that program throughout the rest of the year as we have stated and provided in our guidance. Now that we have the opportunity to shuffle in the opportunities in the Stronghold inventory, many of them have really accretive and capital efficient opportunities. We may make a mix. We may pick up a rig and out there to drill some of these down spacing wells. We certainly will continue to pursue many of the recompletion opportunities that have been identified. I'm not prepared yet to give you any kind of guidance in terms of how much and how we're gonna change our capital spending. We will, though, be providing guidance at the time that we close. Marinos, is there anything you'd like to say? No, sir. You've answered it perfectly, so. Very good. Paul, Peter, Marinos, can you talk a bit, or any of you all, just I know you assumed some hedges. Just what you know, Paul, what's your sort of thoughts these days? I know you had some hedges that, you know, came off pretty nicely on the prior, you know, on your existing assets. Can you talk about just now when you look at the combined assets or the combined assets, will you keep just sort of hedges as is? Would you add more? Just maybe talk a bit more about your hedging philosophy. Yes. We are going to hedge to protect the economics of this acquisition. As a minimum, we will hedge 50% of our PDP production going forward for at least 24 months. We've actually started the process of layering in hedges, and we'll continue to, like I said, protect this acquisition. We may do more than that. Now, up to now, as you know, we already have hedges that we carried over ourselves into 2022. Those were all swaps. So far, we have put in deferred settlement puts at what I consider to be pretty attractive prices to ensure that we protect this acquisition, and we'll continue to do so, you know, putting those in so that we're at least 50% hedged. Now we also will be novating the hedges of the Stronghold hedge book at closing. The way that is working, we will assume the first $20 million of existing hedge liability starting from June first forward. Whatever the difference is in the mark-to-market value that was determined at the signing of the PSA will turn out to be a purchase price adjustment at closing. Then we will novate the remaining hedges. What we do with those hedges at that point will be dependent on what actually what circumstances face us at the time that we close. We may restructure them. We may keep them. With that decision, we'll share more about that at the time of closing as well. Great... [crosstalk] Is that it? One last one, if I could. Just on shareholder return, I assume still the near-term plan remainder of the year is still to pay down debt. Any thoughts in addition to that? Would you think about a small div? Would you think about anything else? Maybe just talk to if there's anything else to consider besides the debt repayment. Well, you know, they say the best time to fix a roof is when the sun's shining. We're gonna take advantage of these strong energy prices. The unique thing about this acquisition, again, it goes back to the capital efficiency of the Stronghold investment inventory. Their economics rival our already really good economics. They have very low break-even costs, just like we do. That allows us to combine the two portfolios of investment opportunities and high grade so that we can maintain our growth plans with less capital. By doing that, we may very well end up optimizing that capital spending so that we can allocate more towards debt repayment. We are laser focused on reducing our leverage ratio long term below one. As we stated in the presentation and in our press release, you know, we anticipate that when we exit this year, our leverage ratio will actually be below what it would have been had we just been standalone. Standalone, we're saying would be below 2%, but now we believe it will be below 1.5%. Even though the absolute debt is higher, the ability of this portfolio to pay down debt in a more rapid pace is significant and very significant to the shareholders. No, we haven't lost sight of our desire to be a premier leader in leverage metrics. Yes, we'll be concentrating on paying down debt as long as prices are as strong as they are. Thank you. Nice job. Thanks, guys. Again, if you have a question, please press star then one. Our next question will come from Noel Parks with Tuohy Brothers. Please go ahead. Hi. Good morning. Good morning. I wondered if you could talk a bit more about the stack pay in the acquired assets. On the slide, it does refer to multistage completions. I'm just curious if those are done kind of in a single pass or done the lowest and then go uphole as those produce out? I'll take that, Noel. Different areas of the assets are treated differently. There's wells that are just one single stage completion, whereas there's other areas where there could be four or five single stages, I mean, stages within one vertical well, typically done at the same time. It's kind of a difficult question to answer. It ranges, but typically, they are done at the same time, depending on how many different stack pays there are in a specific well. Gotcha. Because the assets are a bit gassier than the current Ring portfolio, could you talk about what nat gas infrastructure looks like down there? Are the liquids processed currently by Stronghold or just sold as part of the higher BTU gas stream? They are processed separately. It's a three-stream processing on the gas and oil, but the gas infrastructure there is actually a lot better than what we've been experiencing over the last couple of years on our legacy assets, and we feel confident that is not gonna be an issue. Yeah. Most of the gas there I know goes to Targa, and I think they seem to have been a little more reliable than some of our our gas takeaway folks there in the Northwest Shelf. Hopefully that'll prove to be good. Great. Thanks a lot. The next question will come from John White with ROTH Capital. Please go ahead. Good morning, gentlemen, and congratulations on your transaction. Thank you, John. Turning again, referencing slide eight, which of the formations shown are you most? Yeah. John, you're kind of breaking up, and it's kind of hard for me to understand. Okay. Can you hear me now? I can. On slide eight, which of the formations shown do you view as most prolific? Well, actually, if you refer to the slide, you can see the various different zones that are highlighted more darkly than the others. Starting at the top, the San Andres, working all the way through the zones that are below there, you can see that was the purpose of the visual stratigraphic column that we put there, just so you can actually see and identify the zones that are of most interest. Yeah. Of the highlighted formations, which do you view as the most prolific? Paul, if I may. John, it depends on the area. The Stronghold assets have multiple formations and multiple fields, and sometimes you commingle three or four or five zones altogether, and you produce them all at once. You know, it's kind of a hard question to say. Where you have more stacked pays and you commingle more, those wells probably tend to be stronger and have more reserves. Some other wells, you're just commingling one or two zones together. Overall, the different cost structures, it's all very economical. Okay. Will most of these formations be fracked upon completion? Yes, sir. Okay. I'll pass it along. Thanks very much. The next question will come from Jeffrey Campbell with Alliance Global Partners. Please go ahead. Thanks for getting me back in. I'll ask two more. One, Crane's been called out as the primary acreage, but as you mentioned, there's acreage in three other counties. I just wonder what their status is, meaning are there development locations there? Is there production that can be worked over? Are these generally inactive? Just some sense of what's going on in the other counties. Yeah, I'll take that, and I'll turn it over to Alex as well. Yeah. Primarily in Crane County, where you would attribute a lot of the value of this. Now, we do have activity, and all of the acreage is actually active with respect to recompletions, downspacing and other opportunities. Specifically, from a standpoint of where we're focusing our capital and plan to focus our capital for the rest of the year, Alex, would you like to kind of take that and share that with Jeff? It was hard to hear your question, so if I understand it correctly, actually about 95% and above of the value is in Crane County, and that's where most of our activity will be. Okay. Got it. No, that's helpful. And then my other follow-up was, Paul, you mentioned that modern vertical completion approaches have kind of brought new life to this acreage. It's better completed with vertical wells. I was just wondering, could you identify any specific improvements in those modern completions just to, you know, give us a sense of what's different than in the past? Sure. It's primarily the fracking with slick water that was mostly introduced with the shale plays. That's the technology that's taken on now, and it's being used in conventional assets as well with a lot of success. We'll evaluate, continue to study it some more and try to optimize the completions. There's always room for improvement. Yeah. If you go back to the slide on page eight, where we actually kind of show, in the past, limited entry completion technology seemed to be the flavor of the day, and most people completed their wells in single frack stages. What we found is that having more concentrated fracks, using slick water technology, allows us to reach farther out and contact more of the reservoir and actually recover more. This is just kind of the evolution that we've seen in fracking technology everywhere. Not only is it, although it's been mainly developed for shales, this new technology we find is very applicable to the conventional resources, conventional rocks in many of the basins that we produce from. Yeah, it's just kind of a new thing. If you'll go back and if you were to just do a little bit of research, you'll find that Crane County is one of the most active counties, if not the most active county on the Central Basin Platform, and other operators are out here pursuing and doing many of the same things that we're doing. Right. No, yeah, I'm aware of that. Crane's kind of gone through an evolution cause there was, in the early days, if my memory serves me correctly, there were vertical programs, and then they tried some horizontal drilling, and it sort of has a kind of back in the future feel to it. That actually is quite interesting. That's a good way to put it. Thanks again. You're welcome. Again, if you have a question, please press star then one. Our next question is also a follow-up from Noel Parks with Tuohy Brothers. Please go ahead. Hi. You've mentioned that down spacing was going on in some areas of the Stronghold acreage. Could you talk about the spacing assumptions that underlie the location counts that you've disclosed? Yeah. Alex, did you hear that? I did. I'll take that. Again, back to my initial comment, it depends on the field and the area. Most of the value, though, on some of those downspacing infill wells are in McKnight, what they call the McKnight area. We'll be providing a little bit more information, I think, once we close the deal. That area, there's a lot of 40-acre vertical wells and also 20-acre vertical wells. It just kind of depends on the area. For the most part, they're 40 acres. Got it. You know, with commodity prices as high as they are on the existing Ring acreage, there were many locations, I'm thinking in terms of horizontal locations, that were likely not economic at the low points of the price cycle but do come into the economic category at high prices. I'm just curious if the Stronghold acreage has similar potential. You know, if we're in a long-term $90-$100 world, is there substantial upside from the counts you've identified? You know, Noel, that's a really good question. I will go back and point out that all of the identified opportunities that we evaluated in this acquisition have very competitive and very low break-even costs. Okay? In a low-price environment, and as demonstrated by the Stronghold management team, throughout 2020 and going into 2021, they were able to grow production, or at least maintain production, but actually grow production in a very, very low price environment. Yeah, it stands to reason that the opportunities there that we've identified here will be considerably more economic. There are, in addition to the ones that we've identified, there are also exploration ideas and concepts at other depths, and we haven't fully evaluated those opportunities, so it's kind of hard for us to tell you what the break-even cost will be and what would be the threshold cost to go after those opportunities. We'll be providing more information on that as we learn more about this portfolio and more about these assets. Yes, to answer your question, I do believe that in the future you will see additional opportunities over and above and beyond what we've identified that underpin this acquisition. Again, like they've always said, you know, a great place to find oil is where you already found it. In a stack pay environment like this, where you have large variances in terms of permeabilities and porosities between the various zones, yes, there probably will be other zones that will become economic at these prices and higher prices, but we'll see. Does that answer your question? It sure did. Just the last one from me. Could you just talk a little bit about the deal background and for instance, how long you were working on it? In particular, I just was noticing the structure where you have this $15 million deferred cash payment, and then you also have the convertible. Could you just talk a little bit about the reasons for that structure and as opposed to it all just being straight equity? Also could you just clarify the. Does the volume weighting apply sort of as a look back at closing so that that will sort of determine what the equity compensation is, or is the 360 number just sort of talking about how you got to sort of the headline valuation? Yeah, there's quite a bit bundled up in that. I'll hope I answer all your questions as we go through. The structure was very important. This is something that we initially weren't considering, but as we watched the volatility in the marketplace play out while we were in the process of resolving and trying to finalize the negotiation, we came to the conclusion that the shareholders would benefit by accelerating the closing of this deal and not subject the closing of the transaction to a shareholder vote that would add another two months before we could close. We structured it this way so that we could accelerate the closing and eliminate or reduce the volatility and the impact on potentially not making or not completing this transaction. That is one key component. Now, the volume weighted average price was something that we discussed and agreed on in the negotiations as a way to kind of stabilize the stock price, and more accurately represent the value of the stock over the long term, given the really volatile conditions that we were in. You know, we watched, you know, oil prices go through the roof, and we've watched them pull back. The same thing right now, we're seeing a huge change ripple through the investment community associated with oil and gas companies. A lot of it is confusing to me, and I think to a lot of others. Those were the primary reasons for the volume weighted average price. The way we structured it was primarily to accelerate the closing of the transaction. Does that answer your question? Great... [crosstalk] It sure does. Thanks a lot. That's all for me. This concludes our question-and-answer session. I would like to turn the conference back over to our Chairman and CEO, Mr. Paul McKinney, for any closing remarks. Please go ahead. Thank you, Chuck. I'd like to thank all of you for joining us today on the call. We look forward to completing this transaction and further enhancing shareholder value. Hope you guys all enjoy the long holiday weekend. If you have any questions, our lines are open. You're welcome to call us. Thank you again, and goodbye. The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.