Ring Energy (REI) risk factors, FY2024 10-K

Risks Relating to Our Business, Operations, and Strategy

1. 01Part of our strategy involves using some of the latest available horizontal drilling and completion techniques, which involve additional risks and uncertainties in their application compared to vertical drilling
2. 02If our assessments of purchased properties are materially inaccurate, it could have a significant impact on future operations and earnings
3. 03Prospects that we decide to drill may not yield oil or natural gas in commercially viable quantities
4. 04A substantial percentage of our proved properties are undeveloped; therefore, the risk associated with our success is greater than would be the case if a substantial majority of our properties were categorized as proved developed
5. 05Hedging transactions may limit our potential gains
6. 06Hedging transactions may expose us to risk of financial loss
7. 07We may be adversely affected by natural disasters, pandemics and other catastrophic events, and by man-made problems such as terrorism, that could disrupt our business operations
8. 08The loss of key members of management or failure to attract and retain other highly qualified personnel could affect the Company’s business results

Risks Relating to the Oil and Natural Gas Industry

1. 09A substantial or extended decline in oil and natural gas prices may adversely affect our business, financial condition and results of operations and our ability to meet our capital expenditure obligations and financial commitments
2. 10Our future success will depend on our exploitation, exploration, development, and production activities. Our oil and natural gas exploration and production activities are subject to numerous risks beyond our control, including the risk that drilling will not result in commercially viable oil or natural gas production
3. 11Decreases in oil and natural gas prices may require us to incur write-downs of the financial carrying values of our oil and natural gas properties which could negatively impact the price of our common stock
4. 12Decreases in oil and natural gas prices may affect our bank borrowing base, potentially requiring earlier than anticipated debt repayment, which could negatively impact our financial position, results of operations, and the price of our common stock
5. 13Reserve estimates depend on many assumptions that may turn out to be inaccurate. Any material inaccuracies in these reserve estimates or underlying assumptions will materially affect the quantities and present value of our reserves
6. 14We may incur substantial losses and be subject to substantial liability claims as a result of our oil and natural gas operations
7. 15Unless we replace our oil and natural gas reserves, our reserves and production will decline as reserves are produced
8. 16Competition is intense in the oil and natural gas industry
9. 17If our access to markets is restricted, it could negatively impact our production, our income, and our ability to retain our leases
10. 18Many of our properties are in areas that may have been partially depleted or drained by offset wells and certain of our wells may be adversely affected by actions we or other operators may take when drilling, completing, or operating wells that we or they own
11. 19Multi-well pad drilling may result in volatility in our operating results
12. 20Extreme weather conditions, which could become more frequent or severe due to multiple factors, could adversely affect our ability to conduct drilling, completion, and production activities in the areas where we operate
13. 21Restrictions on drilling activities intended to protect certain species of wildlife may adversely affect our ability to conduct drilling activities in some of the areas where we operate
14. 22Our operations are substantially dependent on the availability, use and disposal of water. New legislation and regulatory initiatives or restrictions relating to water disposal wells could have a material adverse effect on our future business, financial condition, operating results and prospects

Risks Relating to Legal, Regulatory, Privacy, and Tax Matters

1. 23We are subject to complex laws that can affect the cost, manner, or feasibility of doing business
2. 24Our operations may incur substantial liabilities to comply with environmental laws and regulations
3. 25Our operations are subject to a series of risks arising out of the perceived threat of climate change that could result in increased operating costs, limit the areas in which we may conduct oil and natural gas exploration and production activities, and reduce demand for the oil and natural gas we produce
4. 26Changes in tax laws or the interpretation thereof or the imposition of new or increased taxes or fees may adversely affect our operating results and cash flows

Risks Relating to Our Capital Structure

1. 27We have significant indebtedness
2. 28We may be unable to access the equity or debt capital markets to meet our obligations
3. 29We continue to be impacted by inflationary pressures on our operating costs and capital expenditures

Risks Relating to Technology and Cybersecurity

1. 30We rely on computer and telecommunications systems, and failures in our systems or cyber security attacks or breaches could result in information theft, data corruption, disruption in operations, and/or financial loss

Risks Relating to Our Common Stock

1. 31We have registered shares of our common stock for possible resale by certain of our stockholders, resulting in significant "market overhang" of our common stock
2. 32The market price of our common stock may be volatile, which could cause the value of your investment to decline
3. 33We currently do not pay cash dividends on our common stock
4. 34Our Board of Directors can, without stockholder approval, cause preferred stock to be issued on terms that could adversely affect common stockholders
5. 35Provisions under Nevada law could delay or prevent a change in control of our company, which could adversely affect the price of our common stock