Ring Energy is cutting second-quarter 2025 spending by over 50% in the face of commodity price volatility.

The Permian Basin operator now plans to invest between $14 million and $22 million in the second quarter, Ring said in an April 24 investor update. The company’s original guidance called for $38 million in second-quarter capex at the midpoint.

WTI crude prices have dropped 14% since the start of the year, averaging $62.92/bbl during the week ended April 18.

In a recent earnings call, Ring Energy CEO Paul McKinney emphasized that fortifying the company’s balance sheet is a top priority.

“If you’re in a sustainably lower price environment, we’re going to protect our balance sheet,” McKinney told analysts in March.

Ring’s breakeven costs “are well below the current price of oil,” he said, but debt reduction continues to be a priority for the company.

“We also believe this change is warranted considering the uncertainty of future oil prices and is in the best interests of our stockholders,” McKinney said in the April 24 release.

Despite the massive spending cut, Ring maintained its second-quarter production guidance of 14,200 bbl/d of oil and 21,500 boe/d.

Ring said it plans to update investors on plans for the remainder of 2025 during second-quarter earnings in early May.

The company’s shares are down 53% over the past year, trading under $1 per share since the collapse in prices earlier this month. Ring traded at 91 cents/share at midday on April 25, up about 2%.

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Price check

Fellow Permian oil producer Matador Resources slashed its D&C budget by $100 million this week in response to low prices.

Tudor, Pickering, Holt & Co. (TPH) forecasts WTI crude averaging $55/bbl in 2026.

Oilfield services firm Patterson-UTI said U.S. oil drilling may be headed for a period of softness.

“If oil prices remain near current levels for an extended period, we could see some of our customers reevaluate their plans,” CEO Andy Hendricks said April 24. “At present, operations remain stable.”

Larger Permian publics, like Exxon Mobil, Chevron, ConocoPhillips and Diamondback Energy can withstand lower oil prices for longer than their smaller public peers.

Producers in the Permian’s Midland Basin require an average $61/bbl WTI price to profitably drill a new well, according to the Dallas Fed’s first-quarter energy survey. It’s $62/bbl in the deeper Delaware Basin. In fringier parts of the Permian, it can be as high as $70/bbl.

“The U.S. oil cost curve is in a different place than it was five years ago; $70/bbl is the new $50/bbl,” one anonymous executive responded to the Dallas Fed survey.

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Ring’s San Andres

Ring was able to maintain its production guidance after a healthy boost from a recent Central Basin Platform (CBP) deal.

Ring closed a $100 million acquisition of CBP assets from Lime Rock Resources IV LP on March 31, adding 17,700 net acres and approximately 2,300 boe/d of production (80% oil).

The assets in Andrews County, Texas, are adjacent to some of Ring’s core Shafter Lake operations.

San Andres is Ring’s main target on the CBP. In 2024, Ring drilled 22 San Andres horizontals, 17 in the CBP and five in the Northwest Shelf.

Initial recoveries from San Andres wells are lower than Spraberry and Wolfcamp wells in the Permian’s core.

But D&C costs for Ring’s shallower San Andres wells are lower than the big shale wells, ranging between $350/ft and $450/ft.

The Lime Rock deal also gave Ring future upside in the deeper Barnett and Devonian intervals.

The company’s 2024 net sales hit a record 19,648 boe/d, including 4.86 MMbbl of oil, 6.42 Bcf of gas and 1.26 MMbbl of NGL.

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