Company: REI
Filing Date: 2025-03-05
Form Type: 10-K
Source: 0001628280-25-010585
Chunk: 9

Company: RING ENERGY, INC.
Filing Date: 2025-03-05
Form: 10-K
Item: Item 7
Chunk 9
---
 2024 from $6.8 million in 2023 and increased on a Boe basis to $1.12 in 2024 from $1.02 in 2023. Ad valorem taxes increased $1.1 million due to a full year of taxes for the properties acquired in the Founders Acquisition (i.e. Ector County), $0.1 million in Yoakum County, and $0.1 million in Andrews County, offset by a reduction of $0.5 million in Crane County. Additionally, we have accrued approximately $0.5 million for the waste emissions charge ("WEC") in place for the calendar year 2024.

Oil and natural gas production taxes. Oil and natural gas production taxes as a percentage of oil and natural gas sales decreased to 4.40% in 2024 from 5.02% during 2023. In 2024, an accrual of $1.2 million was made for estimated severance tax refunds expected, which lowered the average rate for 2024. As of December 31, 2024, $0.9 million of the estimated refund was received. Excluding this refund, the overall average percentage of production taxes to oil and gas sales in 2024 is 4.7%, which is in line with the historical rates.

Depreciation, depletion and amortization. Our depreciation, depletion and amortization expense increased approximately $10.1 million to $98.7 million in 2024 from $88.6 million in 2023, with $9.8 million of the increase from depletion on our oil and natural gas properties, $0.3 million from amortization of financing lease assets, and $0.04 million from depreciation of fixed assets. The increase in depletion was primarily due to a volume variance of $7.6 million was from an increase of 577,733 in Boe produced. Additionally, depletion experienced a price variance of $2.2 million, from a higher depletion expense per unit overall year over year, due to an 18.9 million increase in average estimated costs of property coupled with a 1.6 million reduction in the amortization base (Boe). Our average depreciation, depletion and amortization per Boe increased to $13.73 per Boe during 2024 from $13.40 per Boe during 2023.

53

Asset retirement obligation accretion. Our asset retirement obligation (“ARO”) acc