Ring Energy Inc. outlined plans to increase oil output by 10% next year while reducing capital expenditures by 10% and targeting a leverage ratio below 1.25x, executives said at the EnerCom Denver conference on Tuesday.
The Permian Basin-focused driller raised its 2026 capital program to $160 million to $165 million from about $115 million, while forecasting 2027 production 16% higher than first-quarter 2026 levels. Production grew from less than 9,000 barrels per day in 2020 to more than 20,000 barrels per day currently, according to Chairman and CEO Paul McKinney.
The shift reflects a broader transition from vertical to horizontal drilling, with horizontal wells now accounting for about 70% of the 2026 program compared with 42% previously. Vertical drilling has fallen to roughly 4% of the budget from 20% earlier this year and 50% in 2024. Drilling and completion costs represent 57% of the capital budget, while infrastructure spending rises to 14% from 10%.
McKinney highlighted the company’s expanded drilling inventory, which now exceeds a decade of development at current rates. Lateral lengths have increased from historical 1-1.5 miles to about 2 miles, while lease operating expenses are projected to decline 1% to 2% in 2027 versus 2026. At current oil prices near $75 per barrel, Ring expects adjusted free cash flow to strengthen materially compared with 2025 and 2026 levels.
The company’s hedging strategy has evolved in 2026, with early-year protection against oil prices below $50 per barrel replaced by wide collars following geopolitical developments. Approximately 30% of 2026 production remains unhedged, while 61% to 64% of 2027 production is unhedged.
Ring Energy’s stock, trading near a 52-week high of $466.34, has gained roughly 13% year-to-date, according to InvestingPro. The company targets a leverage ratio below 1.25x, citing six consecutive years of positive adjusted free cash flow as a foundation for disciplined capital allocation.
