Company: REI
Filing Date: 2025-03-05
Form Type: 10-K
Source: 0001628280-25-010585
Chunk: 124

Company: RING ENERGY, INC.
Filing Date: 2025-03-05
Form: 10-K
Item: Item 16
Chunk 124
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 date and the Leverage Ratio is not greater than 1.25 to 1.00, the required hedging percentage for months 13 through 24 of the rolling 24 month period provided for will be 0% from such hedge testing date to the next succeeding hedge testing date and if the borrowing base utilization percentage is equal to or greater than 25%, but less than 50% and the Leverage Ratio is not greater than 1.25 to 1.00, the required hedging percentage for months 13 through 24 of the rolling 24 month period provided for will be 25% from such hedge testing date to the next succeeding hedge testing date. As of December 31, 2024, $385 million was outstanding on the Credit Facility and the Company was in compliance with all covenants in the Second Credit Agreement.Under the Second Credit Agreement, the applicable percentage for the unused commitment fee is 0.5% per annum for all levels of borrowing base utilization. As of December 31, 2024, the Company's unused line of credit was $215.0 million, which was calculated by subtracting the outstanding Credit Facility balance of $385 million and standby letters of credit of $35,000 in total ($10,000 with state and federal agencies and $25,000 with an insurance company for New Mexico state surety bonds) from the $600 million borrowing base.

NOTE 10 — ASSET RETIREMENT OBLIGATIONThe Company records the obligation to plug and abandon oil and gas wells at the dates properties are either acquired or the wells are drilled. The asset retirement obligation is adjusted each quarter for any liabilities incurred or settled during the period, accretion expense, and any revisions made to the costs or timing estimates. The asset retirement obligation is incurred using an annual credit-adjusted risk-free discount rate at the applicable dates. A reconciliation of the asset retirement obligation for the years ended December 31, 2024, 2023 and 2022 is as follows:

F-29

Balance, December 31, 2021$15,292,054 Liabilities acquired14,538,550 Liabilities incurred353,008 Liabilities settled(940,738)Accretion expense983,432 Balance, December 31, 2022$30,226,306 Liabilities acquired2,090,777 Liabilities incurred439,528 Liabilities sold(5,340,211)Liabilities settled