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ACQUISITIONS & DIVESTITURES | 12 Months Ended
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Dec. 31, 2024
Business Combination, Asset Acquisition, and Joint Venture Formation [Abstract] |
ACQUISITIONS & DIVESTITURES | NOTE 5 — ACQUISITIONS & DIVESTITURES Stronghold Acquisition On July 1, 2022, Ring, as buyer, and Stronghold Energy II Operating, LLC, a Delaware limited liability company (“Stronghold OpCo”) and Stronghold Energy II Royalties, LP, a Delaware limited partnership (“Stronghold RoyaltyCo”, together with Stronghold OpCo, collectively, “Stronghold”), as seller, entered into a purchase and sale agreement (the “Purchase Agreement”). Pursuant to the Purchase Agreement, Ring acquired (the “Stronghold Acquisition”) interests in oil and gas leases and related property of Stronghold consisting of approximately 37,000 net acres located in the Central Basin Platform of the Texas Permian Basin. On August 31, 2022, Ring completed the Stronghold Acquisition. The fair value of consideration paid to Stronghold was approximately $394.0 million, of which $165.9 million, net of customary purchase price adjustments, was paid in cash at closing, $15.0 million was payable in cash after the six-month anniversary of the closing date of the Stronghold Acquisition. Shortly after closing, approximately $4.5 million was paid for inventory and vehicles and approximately $1.8 million was paid for August oil derivative settlements for certain novated hedges. The cash portion of the consideration was funded primarily from borrowings under a new fully committed revolving credit facility (the “Credit Facility”) underwritten by Truist Securities, Citizens Bank, N.A., KeyBanc Capital Markets Inc., and Mizuho Bank, Ltd. The borrowing base of the $1.0 billion Credit Facility was increased from $350 million to $600 million at the closing of the Stronghold Acquisition. The remaining consideration consisted of 21,339,986 shares of Ring common stock and 153,176 shares of newly created Series A Convertible Preferred Stock, par value $0.001 (“Preferred Stock”) which was converted into 42,548,892 shares of common stock on October 27, 2022. Please see "NOTE 11 — STOCKHOLDERS' EQUITY" for further discussion. In addition, Ring assumed $24.8 million of derivative liabilities, $1.7 million of items in suspense and $14.5 million in asset retirement obligations. The Stronghold Acquisition was accounted for as an asset acquisition in accordance with ASC Topic 805 – Business Combinations. The fair value of the consideration paid by Ring and allocation of that amount to the underlying assets acquired, on a relative fair value basis, was recorded on Ring’s books as of the date of the closing of the Stronghold Acquisition. Additionally, costs directly related to the Stronghold Acquisition were capitalized as a component of the purchase price. Determining the fair value of the assets and liabilities acquired required judgment and certain assumptions to be made, the most significant of these being related to the valuation of Stronghold’s oil and gas properties. The inputs and assumptions related to the oil and gas properties were categorized as level 3 in the fair value hierarchy. The following table represents the final allocation of the total cost of the Stronghold Acquisition to the assets acquired and liabilities assumed as of the Stronghold Acquisition date:
Consideration: |
Shares of Common Stock issued | 21,339,986 |
Common Stock price as of August 31, 2022 | $ | 3.24 |
Common Stock Consideration | $ | 69,141,555 |
Shares of Preferred Stock issued | 153,176 |
Aggregate Liquidation Preference | $ | 153,176,000 |
Conversion Price | $ | 3.60 |
As-Converted Shares of Common Stock | 42,548,892 |
Common Stock Price as of August 31, 2022 | $ | 3.24 |
Preferred Stock Consideration | $ | 137,858,446 |
Cash consideration: |
Closing amount paid to Stronghold | $ | 121,392,455 |
Escrow deposit paid | 46,500,000 |
Cash paid for inventory and fixed assets | 4,527,103 |
Cash paid for realized losses on August oil derivatives | 1,777,925 |
Cash received for post-close adjustments, net | (5,535,839) |
Total cash consideration | 168,661,644 |
Fair value of deferred payment liability | 14,807,276 |
Post-close settlement paid to Stronghold | 3,511,170 |
Fair value of consideration paid to seller | 393,980,091 |
Direct transaction costs | 9,162,143 |
Total consideration | $ | 403,142,234 |
Fair value of assets acquired: |
Oil and natural gas properties | $ | 439,589,683 |
Inventory and fixed assets | 4,527,103 |
Amount attributable to assets acquired | $ | 444,116,786 |
Fair value of liabilities assumed: |
Suspense liability | $ | 1,651,596 |
Derivative liabilities, marked to market | 24,784,406 |
Asset retirement obligations | 14,538,550 |
Amount attributable to liabilities assumed | $ | 40,974,552 |
Net assets acquired | $ | 403,142,234 |
Approximately $40.4 million of revenues and $13.6 million of direct operating expenses attributed to the Stronghold Acquisition were included in the Company’s Statements of Operations for the period from September 1, 2022 through December 31, 2022. Delaware Basin Divestiture On May 11, 2023, the Company completed the divestiture of its Delaware Basin assets to an unaffiliated party for $8.3 million. The sale had an effective date of March 1, 2023. The final cash consideration was approximately $7.6 million. As part of the divestiture, the buyer assumed an asset retirement obligation balance of approximately $2.3 million. Founders Acquisition On July 10, 2023, the Company, as buyer, and Founders Oil & Gas IV, LLC (“Founders”), as seller, entered into an Asset Purchase Agreement (the “Founders Purchase Agreement”). Pursuant to the closing of the Purchase Agreement, on August 15, 2023 the Company acquired (the “Founders Acquisition”) interests in oil and gas leases and related property of Founders located in the Central Basin Platform of the Texas Permian Basin in Ector County, Texas, for a purchase price (the “Purchase Price”) of (i) a cash deposit of $7.5 million paid on July 11, 2023 into a third-party escrow account as a deposit pursuant to the Founders Purchase Agreement, (ii) approximately $42.5 million in cash paid on the closing date, net of approximately $10 million of preliminary and customary purchase price adjustments with an effective date of April 1, 2023, and (iii) a deferred cash payment of $11.9 million paid on December 18, 2023, net of customary purchase price adjustments. The Founders Acquisition was accounted for as an asset acquisition in accordance with ASC 805. The fair value of the consideration paid by Ring and allocation of that amount to the underlying assets acquired, on a relative fair value basis, was recorded on Ring’s books as of the date of the closing of the Founders Acquisition. Additionally, costs directly related to the Founders Acquisition were capitalized as a component of the purchase price. Determining the fair value of the assets and liabilities acquired required judgment and certain assumptions to be made, the most significant of these being related to the valuation of Founder’s oil and gas properties. The inputs and assumptions related to the oil and gas properties are categorized as level 3 in the fair value hierarchy. The following table represents the final allocation of the total cost of the Founders Acquisition to the assets acquired and liabilities assumed as of the Founders Acquisition date:
Consideration: |  |
Cash consideration |  |
Escrow deposit released at closing |  | $ | 7,500,000 |
Closing amount paid to Founders |  | 42,502,799 |
Interest from escrow deposit |  | 1,747 |
Fair value of deferred payment liability |  | 14,657,383 |
Post-close adjustments |  | (4,139,244) |
Total cash consideration |  | $ | 60,522,685 |
Direct transaction costs |  | 1,361,843 |
Total consideration |  | $ | 61,884,528 |
Fair value of assets acquired: |  |
Oil and natural gas properties |  | $ | 64,886,472 |
Amount attributable to assets acquired |  | $ | 64,886,472 |
Fair value of liabilities assumed: |  |
Suspense liability |  | $ | 677,116 |
Asset retirement obligations |  | 2,090,777 |
Ad valorem tax liability |  | 234,051 |
Amount attributable to liabilities assumed |  | $ | 3,001,944 |
Net assets acquired |  | $ | 61,884,528 |
Approximately $18.0 million of revenues and $5.0 million of direct operating expenses attributed to the Founders Acquisition are included in the Company’s Statements of Operations for the period from August 16, 2023 through December 31, 2023. New Mexico Divestiture On September 27, 2023, the Company completed the divestiture of its operated New Mexico assets to an unaffiliated party for $4.5 million, resulting in cash consideration of approximately $3.6 million. The sale had an effective date of June 1, 2023. As part of the divestiture, the buyer assumed an asset retirement obligation balance of approximately $2.4 million. Gaines County Texas Sale On December 29, 2023, the Company completed the sale of certain oil and gas properties in Gaines County, Texas to an unaffiliated party for $1.5 million, which resulted in cash proceeds of $1.4 million, net of $0.1 million in sales fees. The sale had an effective date of December 1, 2023. As part of the sale, the buyer assumed an asset retirement obligation balance of approximately $0.5 million. CBP Vertical Well Sale On September 30, 2024, the Company completed the sale of certain oil and gas properties, including vertical wells and associated facilities, within Andrews County, Texas and Gaines County, Texas to an unaffiliated party for a sales price of $5.5 million. As part of the sale, the buyer assumed an asset retirement obligation balance of approximately $2.7 million. Yoakum County Purchase On December 24, 2024, the Company completed the purchase of assorted leases and additional well interests in Yoakum County, Texas from an unaffiliated party for approximately $1.4 million. The purchase had an effective date of December 1, 2024 with a required down payment of $175,000 due at closing and the remainder of $1,175,000 due in January 2025.

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- Definition The entire disclosure for business combinations, including leverage buyout transactions (as applicable), and divestitures. This may include a description of a business combination or divestiture (or series of individually immaterial business combinations or divestitures) completed during the period, including background, timing, and assets and liabilities recognized and reclassified or sold. This element does not include fixed asset sales and plant closings. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Topic 805 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org/805/tableOfContent Reference 2: http://fasb.org/us-gaap/role/ref/legacyRef -Topic 205 -SubTopic 20 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org/205-20/tableOfContent + Details
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