Ring Energy, Inc. (REI) Cash Flow Statement

The OCF/NI ratio is deeply negative in loss quarters (2026Q1 at -0.12, 2025Q3 at -0.86) yet operating cash never fell below $25.9M, which implies the reported losses are dominated by non-cash charges rather than cash operating shortfalls. Conversely, in profitable quarters such as 2024Q4 and 2026Q1 the ratio exceeds 8.0x, indicating net income is a poor proxy for cash realization in both directions and that investors should anchor valuation work on operating cash flow rather than GAAP earnings.

The FCF trajectory shows four negative quarters (2025Q1, 2025Q2, 2026Q1, 2026Q2) against six modestly positive ones, so the profile appears to be roughly break-even rather than compounding. Notably, the largest positive FCF quarters (2025Q3 at $21.1M and 2025Q4 at $18.7M) coincided with reported net losses, which suggests FCF strength in this period was a function of suppressed capex timing rather than improved profitability, a pattern that may not persist if drilling activity normalizes.

The average CapEx/Rev of roughly 42% marks REI as unusually capital-intensive even for an E&P operator, and the 2025Q2 spike to 108.1% ($89.3M of capex against $33.3M of OCF) implies a development program that can be funded only partially from operations in any given quarter. Because capex in most quarters runs well ahead of reported depreciation (which printed under $400K in several periods), the gap suggests growth-weighted spending rather than asset replacement, though the erratic D&A figures warrant separate verification before drawing firm conclusions.

A gap of this magnitude relative to roughly $412M of cumulative OCF means more than 100% of cash generation was offset by non-cash charges in earnings, which is consistent with impairments or exploration write-offs rather than cash leakage. The practical implication is that trailing P/E computed on depressed or negative earnings is close to meaningless for REI, and that enterprise-value multiples on EBITDA or cash flow better reflect the economics, though the underlying nature of the 2026Q1 charge should be confirmed.