Ring Energy, Inc. said that it would start drilling a horizontal oil well in 10 months into the Northwest Shelf area of its lease in the Texas county of Yoakum.
"We are excited to end the year drilling on our NWS properties where we can generate exceptional rates-of-return more prominent than 90% at prevailing oil and natural gas prices," board chairman and CEO Paul D. McKinney said in a company release on Businesswire.com. "After drilling the Badger #6XH, the drilling rig will move to another horizontal San Andres location currently under construction with plans to drill another well after the New Year."
The planned well, the company said in the release, will extend 5,000 miles vertically and span 1.5 miles horizontally in the San Andres area.
The company has also entered contracts for 2,000 barrels of oil per day (BOPD) for 2021, the release said. The price of the contracts is $45.37/BO. Two agreements for 500 BOPD were also entered for 2021 at the price of $45.38/BO. This will make the company's oil position 7,500 Bopd for the new year.
"These wells will be paid for out of cash surplus currently on hand. It is important during volatile markets like these to protect our future cash flows and strengthen our balance sheet," McKinney said in the release. "... We intend to allocate the majority of our future cash flow to paying down debt with the remainder being invested in capital projects that maintain or improve our daily production and create additional liquidity."
If the schedule is met, the company CEO said the corporation is hopeful for results before the end of the year.
"Our Bank Borrowing Base Redetermination continues on schedule and we anticipate the results before the Christmas holidays," McKinney said in the company's press release.