RING ENERGY, INC.REI
RING ENERGY, INC. Segments Disclosure
NOTE 15 — SEGMENT REPORTING
In accordance with ASU 2023-07 "Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures," the Company has performed an assessment of its reporting to comply with the new requirements for the fiscal year beginning January 1, 2024 and for interim periods beginning January 1, 2025. The Company's operations consist of the exploration, production, and sale of oil, natural gas, and NGLs, primarily within the Permian Basin of Texas, and is regulated by the RRC. The Company operates different areas within the Permian Basin, including the Northwest Shelf and Central Basin Platform.
The Company's operations and financials are managed by one cohesive group of individuals, identified as the chief operating decision maker ("CODM"), consisting of the Chairman of the Board and Chief Executive Officer; Executive Vice President and Chief Operations Officer; Executive Vice President and Chief Exploration Officer; Senior Vice President of Operations; and Vice President and Interim Chief Financial Officer. The CODM group reviews the Company's operating results, including condensed financial statements on a monthly basis for evaluating performance and determining resource allocation. The significant expense categories provided to the CODM include lease operating expenses; gathering, transportation and processing costs; ad valorem taxes; and oil and natural gas production taxes. Each of these costs are deducted from oil, natural gas, and natural gas liquids revenues by operating segment to arrive at operating segment profit, used to assess performance.
The Company assessed whether its operating segments exhibited similar economic characteristics and whether its operating segments had a similar nature of products, services, production processes, purchaser types/classes, product distribution, and regulatory environment. Each operating segment has similar products (oil, natural gas, and NGLs), similar production processes, similar types of purchasers (midstream companies, or companies with midstream components), similar methods of product delivery, and is governed by the same regulations. After a thorough analysis of each of these factors with regards to the Company's operating segments, it has been determined that it is appropriate to aggregate its operating segments into a single reportable segment, Exploration and Production, which includes all of its revenues, lease operating expenses, gathering, transportation and processing costs, ad valorem taxes, and oil and natural gas production taxes. Refer to the table below.
| For the years ended December 31, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
| Exploration and Production | |||||||||||||||||
Oil, natural gas, and natural gas liquids revenues (1) | $ | 307,178,072 | $ | 366,327,414 | $ | 361,056,001 | |||||||||||
Lease operating expenses (2) | (79,353,806) | (78,310,949) | (70,158,227) | ||||||||||||||
| Gathering, transportation and processing costs | (585,087) | (506,333) | (457,573) | ||||||||||||||
| Ad valorem taxes | (7,906,586) | (8,069,064) | (6,757,841) | ||||||||||||||
| Oil and natural gas production taxes | (14,312,232) | (16,116,565) | (18,135,336) | ||||||||||||||
| Exploration and Production segment profit | $ | 205,020,361 | $ | 263,324,503 | $ | 265,547,024 | |||||||||||
(1) All of the Company's revenues are within the Permian Basin within the United States.
(2) The CODM also reviews the following cost categories within lease operating expenses. Refer to the following table.
| For the years ended December 31, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
| Lease operating expenses: | |||||||||||||||||
| Workovers | $ | 12,025,118 | $ | 15,150,944 | $ | 14,919,560 | |||||||||||
| Other lease operating expenses | $ | 67,328,688 | $ | 63,160,005 | $ | 55,238,667 | |||||||||||
| Total lease operating expenses | $ | 79,353,806 | $ | 78,310,949 | $ | 70,158,227 | |||||||||||
The following tables include a reconciliation of the total reportable segments' measures of profit or loss to the Company's total income (loss) before income taxes. Additionally included is a reconciliation between the reportable segments' assets to the Company's total assets.
| For the year ended December 31, 2025 | |||||||||||||||||
| Exploration and Production | Corporate | Total Company | |||||||||||||||
| Oil, Natural Gas, and Natural Gas Liquids Revenues | $ | 307,178,072 | $ | — | $ | 307,178,072 | |||||||||||
| Lease operating expenses | (79,353,806) | — | (79,353,806) | ||||||||||||||
| Gathering, transportation and processing costs | (585,087) | — | (585,087) | ||||||||||||||
| Ad valorem taxes | (7,906,586) | — | (7,906,586) | ||||||||||||||
| Oil and natural gas production taxes | (14,312,232) | — | (14,312,232) | ||||||||||||||
Depreciation, depletion and amortization (3) | — | (96,414,150) | (96,414,150) | ||||||||||||||
Ceiling test impairment (3) | — | (108,825,446) | (108,825,446) | ||||||||||||||
| Asset retirement obligation accretion | — | (1,490,255) | (1,490,255) | ||||||||||||||
| Operating lease expense | — | (700,362) | (700,362) | ||||||||||||||
| General and administrative expense | — | (31,928,576) | (31,928,576) | ||||||||||||||
| Interest income | — | 290,879 | 290,879 | ||||||||||||||
| Interest (expense) | — | (40,430,929) | (40,430,929) | ||||||||||||||
| Gain (loss) on derivative contracts | — | 31,658,839 | 31,658,839 | ||||||||||||||
| Gain (loss) on disposal of assets | — | 446,400 | 446,400 | ||||||||||||||
| Other income | — | 189,294 | 189,294 | ||||||||||||||
| Income (Loss) Before Benefit from (Provision for) Income Taxes | $ | 205,020,361 | $ | (247,204,306) | $ | (42,183,945) | |||||||||||
Total Assets (3) | $ | 1,365,252,029 | $ | 46,647,220 | $ | 1,411,899,249 | |||||||||||
| Capital expenditures | $ | 98,211,527 | $ | — | $ | 98,211,527 | |||||||||||
(3) All of the Company's assets are located within the United States. As the CODM does not view depreciation, depletion and amortization or ceiling test impairment as a significant Exploration and Production segment expense, the Company has included this expense within the Corporate column of the reconciliation table.
| For the year ended December 31, 2024 | |||||||||||||||||
| Exploration and Production | Corporate | Total Company | |||||||||||||||
| Oil, Natural Gas, and Natural Gas Liquids Revenues | $ | 366,327,414 | $ | — | $ | 366,327,414 | |||||||||||
| Lease operating expenses | (78,310,949) | — | (78,310,949) | ||||||||||||||
| Gathering, transportation and processing costs | (506,333) | — | (506,333) | ||||||||||||||
| Ad valorem taxes | (8,069,064) | — | (8,069,064) | ||||||||||||||
| Oil and natural gas production taxes | (16,116,565) | — | (16,116,565) | ||||||||||||||
Depreciation, depletion and amortization (3) | — | (98,702,843) | (98,702,843) | ||||||||||||||
Ceiling test impairment (3) | — | — | — | ||||||||||||||
| Asset retirement obligation accretion | — | (1,380,298) | (1,380,298) | ||||||||||||||
| Operating lease expense | — | (700,362) | (700,362) | ||||||||||||||
| General and administrative expense | — | (29,640,300) | (29,640,300) | ||||||||||||||
| Interest income | — | 491,946 | 491,946 | ||||||||||||||
| Interest (expense) | — | (43,311,810) | (43,311,810) | ||||||||||||||
| Gain (loss) on derivative contracts | — | (2,365,917) | (2,365,917) | ||||||||||||||
| Gain (loss) on disposal of assets | — | 89,693 | 89,693 | ||||||||||||||
| Other income | — | 106,656 | 106,656 | ||||||||||||||
| Income (Loss) Before Benefit from (Provision for) Income Taxes | $ | 263,324,503 | $ | (175,413,235) | $ | 87,911,268 | |||||||||||
Total Assets (3) | $ | 1,381,583,504 | $ | 26,515,970 | $ | 1,408,099,474 | |||||||||||
| Capital expenditures | $ | 151,946,171 | $ | — | $ | 151,946,171 | |||||||||||
(3) All of the Company's assets are located within the United States. As the CODM does not view depreciation, depletion and amortization or ceiling test impairment as a significant Exploration and Production segment expense, the Company has included this expense within the Corporate column of the reconciliation table.
| For the year ended December 31, 2023 | |||||||||||||||||
| Exploration and Production | Corporate | Total Company | |||||||||||||||
| Oil, Natural Gas, and Natural Gas Liquids Revenues | $ | 361,056,001 | $ | — | $ | 361,056,001 | |||||||||||
| Lease operating expenses | (70,158,227) | — | (70,158,227) | ||||||||||||||
| Gathering, transportation and processing costs | (457,573) | — | (457,573) | ||||||||||||||
| Ad valorem taxes | (6,757,841) | — | (6,757,841) | ||||||||||||||
| Oil and natural gas production taxes | (18,135,336) | — | (18,135,336) | ||||||||||||||
Depreciation, depletion and amortization (3) | — | (88,610,291) | (88,610,291) | ||||||||||||||
Ceiling test impairment (3) | — | — | — | ||||||||||||||
| Asset retirement obligation accretion | — | (1,425,686) | (1,425,686) | ||||||||||||||
| Operating lease expense | — | (541,801) | (541,801) | ||||||||||||||
| General and administrative expense | — | (29,188,755) | (29,188,755) | ||||||||||||||
| Interest income | — | 257,155 | 257,155 | ||||||||||||||
| Interest (expense) | — | (43,926,732) | (43,926,732) | ||||||||||||||
| Gain (loss) on derivative contracts | — | 2,767,162 | 2,767,162 | ||||||||||||||
| Gain (loss) on disposal of assets | — | (87,128) | (87,128) | ||||||||||||||
| Other income | — | 198,935 | 198,935 | ||||||||||||||
| Income (Loss) Before Benefit from (Provision for) Income Taxes | $ | 265,547,024 | $ | (160,557,141) | $ | 104,989,883 | |||||||||||
Total Assets (3) | $ | 1,338,584,701 | $ | 37,911,691 | $ | 1,376,496,392 | |||||||||||
| Capital expenditures | $ | 151,969,735 | $ | — | $ | 151,969,735 | |||||||||||
(3) All of the Company's assets are located within the United States. As the CODM does not view depreciation, depletion and amortization or ceiling test impairment as a significant Exploration and Production segment expense, the Company has included this expense within the Corporate column of the reconciliation table.
The following table discloses the purchasers from which 10% or more of revenues were derived in the years noted.
| For the years ended December 31, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
Purchasers with 10% or more percentage of total revenue (4) | |||||||||||||||||
| Phillips 66 Company ("Phillips") | 67% | 61% | 66% | ||||||||||||||
| Concord Energy LLC | 13% | 14% | * | ||||||||||||||
| LPC Crude III, LLC | * | 13% | * | ||||||||||||||
| NGL Crude Partners ("NGL Crude") | * | 10% | 10% | ||||||||||||||
| Enterprise Crude Oil LLC ("Enterprise") | * | * | 12% | ||||||||||||||
(4) All the Company's purchasers are within the Exploration and Production operating segment.
* Represents less than 10%
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Mar 4, 2026 | Showing above |
| 2024 | Mar 5, 2025 | |
About Segments Disclosures
Segment disclosures break a company into its reportable operating units, revealing revenue, profit, and asset allocation that consolidated financial statements obscure. Under ASC 280, segments must match how the chief operating decision maker views the business, providing a window into internal management structure and resource allocation priorities.
Key signals: compare segment margins to identify which units drive profitability and which destroy value. Watch for changes in the number of reportable segments — segment aggregation or disaggregation often coincides with strategic shifts or attempts to obscure declining performance. Intersegment elimination patterns reveal internal pricing practices. The reconciliation between segment totals and consolidated figures exposes corporate overhead allocation and unallocated items. Geographic revenue concentration highlights regulatory and currency exposure. Compare segment-level capital expenditure against segment revenue to assess where management is investing for future growth versus harvesting existing assets.