Ring Energy Targets 10%+ 2027 Growth as Horizontal Drilling Expands Runway

Ring Energy plans more than 10% production growth in 2027, supported by an estimated $135 million–$165 million capital budget and a doubling of longer horizontal wells compared with its 2026 program.

The company is expanding horizontal drilling and “co-development” across its Central Basin Platform assets, aiming to develop multiple formations from fewer surface locations and improve capital efficiency.

Management expects to remain free-cash-flow positive at $60 oil and targets roughly 1x leverage by year-end 2027, which could reduce required hedging and increase exposure to commodity prices.

Ring Energy executives said the company is positioning for higher production, improved capital efficiency and lower leverage in 2027 as it expands horizontal drilling across its Central Basin Platform assets in West Texas. Speaking at the Water Tower Virtual Insights Conference, Chief Executive Officer Paul McKinney said the company’s strategy centers on maintaining low operating costs, shallow production declines and a sufficient inventory of drilling opportunities. He said those characteristics can help the company withstand commodity-price volatility while supporting sustainable EBITDA growth.

“Growing organically, in our opinion, is really one of the most effective ways of generating value,” McKinney said. Chief Financial Officer Sonu Johl added that the company has built a runway of development opportunities and now has the capital discipline to pursue them.

McKinney said Ring’s acquisitions of Stronghold, Founders and Lime Rock were initially viewed largely as vertical-well development opportunities. However, the company has since applied horizontal drilling and multi-stage completion techniques to stacked conventional formations in the Central Basin Platform. The company said it has found that longer horizontal laterals can be economic in formations that had historically been developed vertically or were not considered attractive under older technologies.

Ring’s approach includes “co-development,” in which it develops multiple formations from one location. According to McKinney, co-development can reduce the number of surface locations needed while improving the amount of production and reserves generated per dollar spent. He said the method has expanded Ring’s inventory of potential drilling locations and could support production and EBITDA growth with less capital than a primarily vertical program.

Johl compared the company’s current transition to the evolution seen elsewhere in the Permian Basin, where operators moved from vertical drilling to horizontal drilling and then to multiwell pad development. He said Ring’s acquired acreage overlaps with areas where the company is now conducting horizontal development.

McKinney also described the Central Basin Platform as a “target rich environment,” saying many public operators remain focused on unconventional development in the Delaware and Midland basins. He said Ring sees less competition in certain Central Basin Platform areas, including for formations and acreage that had not been economic under vertical development methods.

Ring said its May equity offering, combined with stronger oil prices during 2026, strengthened its balance sheet and enabled it to accelerate infrastructure investments that management believes are needed ahead of a larger drilling program. McKinney said the company has expanded investments in frack ponds, saltwater disposal and handling facilities, produced-water treatment capacity and larger tank batteries. The facilities are intended...