Company: REI
Filing Date: 2025-03-05
Form Type: 10-K
Source: 0001628280-25-010585
Chunk: 136

Company: RING ENERGY, INC.
Filing Date: 2025-03-05
Form: 10-K
Item: Item 16
Chunk 136
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 of the Company's tax attributes could result in adjustments to the valuation allowance in future years as it updates its analysis based on new information. As of December 31, 2024, we carried a valuation allowance against our federal and state deferred tax assets of $0. We have considered both the positive and negative evidence in determining whether it was more likely than not that some portion or all of our deferred tax assets will be realized. The amount of deferred tax assets considered realizable could, however, be adjusted if estimates of future taxable income during the carryforward period are reduced or increased or if objective negative evidence is no longer present and additional weight is given to subjective positive evidence, including projections for growth. As of June 30, 2023, the Company was no longer in a cumulative loss position. As a result, future forecasted pre-tax book income was considered as positive evidence in assessing the valuation allowance. Based on the change in judgment on the realizability of the related federal deferred tax assets in future years, the Company released $24.2 million of valuation allowance as a benefit during the year ended December 31, 2023. This, coupled with the income tax provision for the year ended December 31, 2024 resulted in an ending federal net deferred tax liability of $24,632,169.  Additionally, the Company reported a net state deferred tax liability at December 31, 2024 of $3,959,633 attributable to certain state deferred tax liabilities mainly associated with property and equipment.

F-37

NOTE 15 — SEGMENT REPORTINGIn accordance with ASU 2023-07 "Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures," the Company has performed an assessment of its reporting to comply with the new requirements for the fiscal year beginning January 1, 2024. The Company's operations consist of the exploration, production, and sale of oil, natural gas, and NGLs, primarily within the Permian Basin of Texas, and is regulated by the Texas RRC. The Company operates different areas within the Permian Basin, including the Northwest Shelf and Central Basin Platform. The Company's operations and financials are managed by one cohesive group of individuals, identified as the chief operating decision maker ("CODM"), consisting of the Chairman of the Board and Chief Executive Officer; Executive Vice President and Chief Financial Officer; Executive Vice President of Engineering and Corporate Strategy; Executive Vice President of Exploration and Geosciences; and Vice President of Operations. The CODM