UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
DC 20549
SCHEDULE
13D/A
Under
the Securities Exchange Act of 1934
(Amendment No. 2)*
RING ENERGY, INC.
(Name of
Issuer)
COMMON STOCK, PAR VALUE $0.001 PER SHARE
(Title of Class of
Securities)
76680V108
(CUSIP
Number)
Dr.
Simon G. Kukes
575
N. Dairy Ashford
Energy
Center II, Suite 210
Houston,
Texas 77079
Telephone: (713) 969-5027
(Name,
Address and Telephone Number of Person
Authorized to
Receive Notices and Communications)
March 2, 2019
(Date of Event
which Requires Filing of this Statement)
If the
filing person has previously filed a statement on Schedule 13G to
report the acquisition that is the subject of this Schedule 13D,
and is filing this schedule because of §§240.13d-1(e),
240.13d-1(f) or 240.13d-1(g), check the following
box. ☐
Note: Schedules filed in paper format shall include a signed
original and five copies of the schedule, including all exhibits.
See §240.13d-7 for other parties to whom copies are to be
sent.
* The
remainder of this cover page shall be filled out for a reporting
person’s initial filing on this form with respect to the
subject class of securities, and for any subsequent amendment
containing information which would alter disclosures provided in a
prior cover page.
The
information required on the remainder of this cover page shall not
be deemed to be “filed” for the purpose of
Section 18 of the Securities Exchange Act of 1934
(“Act”)
or otherwise subject to the liabilities of that section of the Act
but shall be subject to all other provisions of the Act (however,
see the Notes).
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Cusip No. 76680V108
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Schedule 13D
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Page 2
of
8
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|
1
|
NAME OF REPORTING
PERSONS
Dr. Simon G.
Kukes
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|
2
|
CHECK THE
APPROPRIATE BOX IF A MEMBER OF A GROUP
(a)
☒
(b)
☐
|
|
3
|
SEC USE
ONLY
|
|
4
|
SOURCE OF
FUNDS
PF
|
|
5
|
CHECK BOX IF
DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM
2(d) or 2(e) ☐
|
|
6
|
CITIZENSHIP OR
PLACE OF ORGANIZATION
United States
Citizen
|
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NUMBER
OF
|
7
|
SOLE VOTING
POWER
6,600,818 shares of
Common Stock
|
|
|
SHARES
BENEFICIALLY
|
8
|
SHARED VOTING
POWER
-0-
|
|
|
OWNED
BY
EACH
|
9
|
SOLE DISPOSITIVE
POWER
6,600,818 shares of
Common Stock
|
|
|
REPORTING
PERSON
WITH
|
10
|
SHARED DISPOSITIVE
POWER
-0-
|
|
|
11
|
AGGREGATE AMOUNT
BENEFICIALLY OWNED BY EACH REPORTING PERSON
6,600,818 shares of
Common Stock
|
|
12
|
CHECK BOX IF THE
AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES
☐
Not
applicable.
|
|
13
|
PERCENT OF CLASS
REPRESENTED BY AMOUNT IN ROW (11)
9.7% of the
Issuer’s outstanding Common Stock(1)
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|
14
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TYPE OF REPORTING
PERSON
IN
|
(1) Based on the
number of outstanding shares of Common Stock set forth on the cover
page of the Issuer’s Quarterly Report on Form 10-Q for
the quarter ended September 30, 2019, as filed with the Securities
and Exchange Commission on November 6, 2019.
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Cusip No. 76680V108
|
Schedule 13D
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Page
3
of
8
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1
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NAME OF REPORTING
PERSONS
Ivar
Siem
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2
|
CHECK THE
APPROPRIATE BOX IF A MEMBER OF A GROUP
(a)
☒
(b)
☐
|
|
3
|
SEC USE
ONLY
|
|
4
|
SOURCE OF
FUNDS
PF
|
|
5
|
CHECK BOX IF
DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM
2(d) or 2(e) ☐
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6
|
CITIZENSHIP OR
PLACE OF ORGANIZATION
|
|
NUMBER
OF
|
7
|
SOLE VOTING
POWER
16,000 (#) shares
of Common Stock
|
|
|
SHARES
BENEFICIALLY
|
8
|
SHARED VOTING
POWER
-0-
|
|
|
OWNED
BY
EACH
|
9
|
SOLE DISPOSITIVE
POWER
16,000 (#) shares
of Common Stock
|
|
|
REPORTING
PERSON
WITH
|
10
|
SHARED DISPOSITIVE
POWER
-0-
|
|
|
11
|
AGGREGATE AMOUNT BENEFICIALLY OWNED
BY EACH REPORTING PERSON
16,000 (#) shares of
Common Stock
|
|
12
|
CHECK BOX IF THE AGGREGATE AMOUNT
IN ROW (11) EXCLUDES CERTAIN SHARES
☐
Not
Applicable
|
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13
|
PERCENT OF CLASS REPRESENTED BY
AMOUNT IN ROW (11)
*% of the Issuer's
outstanding Common Stock (1)
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14
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TYPE OF REPORTING
PERSON
IN
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* Less
than 0.1%.
(#) Includes
12,000 shares held in a joint account with Mr. Siem’s
spouse.
(1) Based
on the number of outstanding shares of Common Stock set forth on
the cover page of the Issuer’s Quarterly Report on
Form 10-Q for the quarter ended September 30, 2019, as filed
with the Securities and Exchange Commission on November 6,
2019.
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Cusip No. 76680V108
|
Schedule 13D
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Page 4
of
8
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1
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NAME OF REPORTING
PERSONS
J. Douglas
Schick
|
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2
|
CHECK THE
APPROPRIATE BOX IF A MEMBER OF A GROUP
(a)
☒
(b)
☐
|
|
3
|
SEC USE
ONLY
|
|
4
|
SOURCE OF
FUNDS
PF
|
|
5
|
CHECK BOX IF
DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM
2(d) or 2(e) ☐
|
|
6
|
CITIZENSHIP OR
PLACE OF ORGANIZATION
United States Citizen
|
|
NUMBER
OF
|
7
|
SOLE VOTING
POWER
7,500 shares of
Common Stock
|
|
|
SHARES
BENEFICIALLY
|
8
|
SHARED VOTING
POWER
-0-
|
|
|
OWNED
BY
EACH
|
9
|
SOLE DISPOSITIVE
POWER
7,500 shares of
Common Stock
|
|
|
REPORTING
PERSON
WITH
|
10
|
SHARED DISPOSITIVE
POWER
-0-
|
|
|
11
|
AGGREGATE AMOUNT BENEFICIALLY OWNED
BY EACH REPORTING PERSON
7,500 shares of Common
Stock
|
|
12
|
CHECK BOX IF THE AGGREGATE AMOUNT
IN ROW (11) EXCLUDES CERTAIN SHARES
☐
Not
Applicable
|
|
13
|
PERCENT OF CLASS REPRESENTED BY
AMOUNT IN ROW (11)
*% of the Issuer's outstanding
Common Stock (1)
|
|
14
|
TYPE OF REPORTING
PERSON
IN
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* Less than
0.1%.
(1) Based
on the number of outstanding shares of Common Stock set forth on
the cover page of the Issuer’s Quarterly Report on
Form 10-Q for the quarter ended September 30, 2019, as filed
with the Securities and Exchange Commission on November 6,
2019.
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Cusip No. 76680V108
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Schedule 13D
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Page
6
of
8
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This Amendment No. 2 (the
“Amendment”)
amends and supplements the Schedule 13D filed with the Securities
and Exchange Commission (the “Commission”)
on October 21, 2019, by Dr. Simon G. Kukes, Mr. John J. Scelfo (no
longer a member of the Reporting Group), Mr. Ivar Siem
and Mr. J. Douglas
Schick, as amended by Amendment No. 1 thereto filed on February 18,
2020 (“Amendment No.
1” and the Schedule 13D,
as amended to date, the “Schedule
13D”).
Capitalized
terms used but not otherwise defined in this Amendment have the
meanings ascribed to such terms in the Schedule 13D. Except as
expressly amended and supplemented by this Amendment, the Schedule
13D is not amended or supplemented in any respect, and the
disclosures set forth in the Schedule 13D, other than as amended
herein are incorporated by reference herein.
Item 2. Identity and Background
(a)
This statement is filed by:
(i)
Dr. Simon G. Kukes (“Kukes”).
Kukes is the Chief Executive Officer and a member of the Board of
Directors of PEDEVCO Corp. (“PEDEVCO”).
(ii)
Mr. Ivar Siem (“Siem”).
Siem currently serves as the Chairman of American Resources, Inc.
(“American”).
Siem is also a member of the Board of Directors of
PEDEVCO.
(iii)
Mr. J. Douglas Schick (“Schick”).
Schick is the President of PEDEVCO and the Chief Executive Officer
of American Resources, Inc.
Each of Kukes, Siem and Schick are referred to
herein as a “Reporting
Person” and collectively
as the “Reporting
Persons”.
(b)
The principal business address of Kukes, Siem and Schick is 575 N.
Dairy Ashford, Energy Center II, Suite 210, Houston, Texas
77079.
(c)
The principal occupation of:
(i) Kukes is the Chief Executive Officer of
PEDEVCO, an oil and gas exploration and development company, which
has the principal business address set forth above
under Item
2(b)(i);
(ii) Siem is the Chairman of American
Resources, Inc., an oil and gas investment, development and
operating company focused on acquisition of underexploited,
distressed and/or undervalued oil and gas assets and companies,
which has the principal business address set forth above
under Item
2(b)(i);
and
(iii) Schick is the President of PEDEVCO, an
oil and gas exploration and development company, which has the
principal business address set forth above
under Item
2(b)(i).
(d)
The Reporting Persons have not, during the last five years, been
convicted in a criminal proceeding (excluding traffic violations or
similar misdemeanors).
(e)
The Reporting Persons have not, during the last five years, been
party to a civil proceeding of a judicial or administrative body of
competent jurisdiction and as a result of such proceeding was or is
subject to a judgment, decree or final order enjoining future
violations of, or prohibiting or mandating activities subject to,
federal or state securities laws or finding any violation with
respect to such laws.
(f) Kukes
and Schick are citizens of the United States, and Siem is a citizen
of Norway.
Item
3. Source of Amount of Funds or Other Compensation
Item 3 is hereby amended and modified as follows:
The
Reporting Persons beneficially own an aggregate of 6,623,681 shares
of Common Stock (the “Shares”), all of which
were purchased by the Reporting Persons in open market
transactions, for an aggregate of approximately $13.3
million.
The
source of funding for the purchase of the Common Stock held by the
Reporting Persons was the personal funds of the respective
purchasers.
Item
4. Purpose of Transaction
On
March 2, 2020, the Reporting Persons issued a press release, a copy
of which is attached as Exhibit 99.1 hereto, which
includes a letter to the Board of Directors of the Issuer. The full
text of the press release is incorporated into this Item 4 by
reference.
The
Reporting Persons acquired the Shares in the belief that the Shares
were undervalued. The Reporting Persons have spoken to, and intend
to continue to speak with, representatives of the Issuer’s
board of directors and management to discuss enhancing shareholder
value and the potential for undertaking transactions which the
Reporting Persons believe will be beneficial to stockholders of the
Issuer, which may include an acquisition, disposition or
combination transaction with a separate private or public company
(a “ Potential
Transaction”) and/or a transaction of the type
described in the press release.
The
Reporting Persons believe the board of directors of the Issuer
should conduct a strategic process to comprehensively assess the
synergies, cost savings and benefits associated with a Potential
Transaction and/or a transaction of the type described in the press
release and believe that stockholder value of the Issuer might be
best served, and enhanced, by entering into a Potential Transaction
and/or a transaction of the type described in the press
release.
The
Reporting Persons are considering all their options and, while they
have no present plan to do so (except as otherwise disclosed in
this Item 4), they reserve the right and are considering whether to
propose other transactions which relate to or would result in one
or more of the actions specified in clauses
(a) through (f) or (j) (as relates to (a) through (f)) of
Item 4 of Schedule 13D. The Reporting persons have no present plan
to propose any transaction which relates or would result in one or
more of the actions specified in clauses (g) through (i) or (j) (as
relates to (g) through (i)) of Item 4 of Schedule 13D.
The
Reporting Persons may, from time to time and at any time: (i)
acquire additional Shares and/or other equity, debt, notes,
instruments or other securities of the Issuer and/or its affiliates
(collectively, “Securities”) in the open
market or otherwise; (ii) dispose of any or all of their Securities
in the open market or otherwise; or (iii) engage in any hedging or
similar transactions with respect to the Securities.
Item
5. Interest in Securities of the Issuer
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|
(a)
|
As of
the close of business on February 28, 2020, the Reporting Persons
together beneficially own in aggregate 6,623,681 shares of Common
Stock representing 9.8% of the 67,811,111 shares of the
Issuer’s issued and outstanding Common Stock, based on the
number of outstanding shares of Common Stock set forth on the cover
page of the Issuer’s Quarterly Report on Form 10-Q for
the quarter ended September 30, 2019, as filed with the Securities
and Exchange Commission on November 6, 2019.
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|
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(b)
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Kukes
has the sole power to vote and dispose of 6,600,181 shares of
Common Stock reported in this Schedule 13D beneficially owned by
Kukes; Siem has the sole power to vote and dispose of 16,000 shares
of Common Stock reported in this Schedule 13D beneficially owned by
Siem (notwithstanding the 12,000 shares held in a joint account
with his spouse); and Schick has the sole power to vote and dispose
of 7,500 shares of Common Stock reported in this Schedule 13D
beneficially owned by Schick
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|
|
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(c)
|
The
following table sets forth all transactions with respect to Shares
effected during the past sixty (60) days by any of the Reporting
Persons not previously reported in Amendment No. 1. All
transactions represent the purchases, or sales, as applicable, of
Common Stock in open market transactions.
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|
Cusip No. 76680V108
|
Schedule 13D
|
Page
7
of
8
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Name of Reporting Person
|
Acquisition or Disposition of Shares
|
Date of Transaction
|
Amount of Securities Acquired
|
Average Price Per Share ($)
|
|
Mr. Ivar Siem
|
Acquisition
|
2/18/2020
|
300
|
$2.72
|
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Mr. Ivar Siem
|
Acquisition
|
2/21/2020
|
700
|
$2.72
|
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Dr. Simon Kukes
|
Acquisition
|
2/26/2020
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100,000
|
$1.61
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Dr. Simon Kukes
|
Acquisition
|
2/26/2020
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58,181
|
$1.52
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Dr. Simon Kukes
|
Acquisition
|
2/27/2020
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100,000
|
$1.40
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Dr. Simon Kukes
|
Acquisition
|
2/27/2020
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142,000
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$1.49
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(d)
|
No other person has
the right to receive or the power to vote or to direct the
vote, or to dispose or direct the disposition, of sale of the
securities beneficially owned by the Reporting Persons as described
in Item 5(a), above.
|
Item
7. Material to be Filed as Exhibits
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Exhibit No.
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Description
|
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Press
Release dated March 2, 2020
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Joint
Filing Agreement by and among Dr. Simon G. Kukes, Mr. Ivar Siem and
Mr. J. Douglas Schick dated March 2, 2020
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Cusip No. 76680V108
|
Schedule 13D
|
Page
8
of
8
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Signatures
After
reasonable inquiry and to the best of my knowledge and belief, each
of the undersigned certifies that the information set forth in this
statement is true, complete and correct.
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Dated:
March 2, 2020
/s/ Dr. Simon G. Kukes
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Dr. Simon G. Kukes
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Dated:
March 2, 2020
/s/ Mr. Ivar Siem
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Mr. Ivar Siem
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Dated:
March 2, 2020
/s/ Mr. J. Douglas Schick
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Mr. J. Douglas Schick
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The original statement shall be signed by each person on whose
behalf the statement is filed or his authorized representative. If
the statement is signed on behalf of a person by his authorized
representative (other than an executive officer or general partner
of the filing person), evidence of the representative’s
authority to sign on behalf of such person shall be filed with the
statement: provided, however, that a power of attorney for this
purpose which is already on file with the Commission may be
incorporated by reference. The name and any title of each person
who signs the statement shall be typed or printed beneath his
signature.
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AMERICAN RESOURCES, INC.
|
Exhibit
99.1
SK Energy LLC
|
American Resources and SK Energy Deliver Letter to the Board of
Directors of Ring Energy, Inc.
Dr. Simon Kukes Further Increases Holdings in Ring Energy,
Inc.
HOUSTON,
TX, March 2, 2020 /PRNewswire/-- American Resources,
Inc., and SK Energy LLC, the investment vehicle of Dr. Simon Kukes,
one of the largest shareholders of Ring Energy, Inc., today
announced that they have delivered a joint letter to Ring
Energy’s Board of Directors regarding deficiencies in Ring
Energy’s business strategy, management, and corporate
governance. To date, the Ring Energy Board has not yet responded to
the letter with any concrete corrective actions.
Dr.
Kukes, through his personal investment company, SK Energy LLC, has
partnered with American Resources, Inc. to evaluate and pursue
different options to enhance Ring Energy's shareholder value, as
they believe that Ring Energy's shares are
undervalued.
Dr.
Kukes and American Resources, Inc. hold a combined ownership
interest of approximately 9.8% of Ring Energy’s issued and
outstanding common stock, with Dr. Kukes announcing today that he
increased his personal holdings from over 9.1% to over 9.7% of Ring
Energy’s issued and outstanding common stock in the last
week.
The
full text of the letter to the Ring Energy Board is as
follows.
February 14,
2020
The
Board of Directors
Ring
Energy, Inc.
901
West Wall Street
3rd
Floor
Midland, TX
79701
Via
Email and Overnight Delivery
Ladies
and Gentlemen,
Our
investor group (“we” or “us”) consisting of
our lead investor, Dr. Simon Kukes and related entities, together
with American Resources, Inc., beneficially holds over 6,000,000
shares of Ring Energy, Inc.’s (“Ring” or the
“Company”) capital stock representing approximately 9%
ownership of the Company. We are the second largest owner of Ring
stock (and by far the largest non-index fund holder of the
stock).
As you
are aware, under Ring’s current management, the
Company’s value has eroded tremendously over the last 24
months, with its stock price precipitously dropping from the
mid-$15.00’s per share in January 2018, to the
mid-$5.00’s per share in January 2019, and hitting a low of
$1.30 per share in September 2019, settling currently in the
low-$2.00’s per /share. In percentage terms, Ring has
declined over 85% in the past 24 months compared with a drop of
approximately 43% for the XOP (small cap E&P index). This
represents a significant loss of equity value – losing over
$800,000,000 in market capitalization over the last 24 months
alone, while loading its balance sheet with over $360,000,000 in
debt.
575 N. Dairy Ashford ● Suite 210 ● Houston, Texas
77079
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AMERICAN RESOURCES, INC.
|
SK Energy LLC
|
Part of
this value erosion can of course be explained by general market
conditions, but a large part falls squarely on the Board’s
and management’s shoulders. It must be obvious to the Board
that certain corrective actions should have been taken some time
ago!
Since
establishing our ownership position in Ring, we have, on several
occasions, engaged in discussions with the Chairman of Ring’s
Board to express our concerns and offer suggestions on corrective
actions. These concerns center primarily on issues related to
Ring’s corporate governance and communications to the
investing public, Ring’s high level of debt and high
percentage utilization of its reserve-based lending facility, and
Ring’s continued working capital deficit. In our opinion,
these issues are the reason Ring has underperformed the market. We
believe that any and all opportunities available to Ring to explore
ways to reduce its debt and deleverage it assets, divest of
non-core assets, acquire un-levered synergetic assets and/or align
with strategic investors should be aggressively explored and
pursued. We are not confident that Ring’s existing management
has the same view as we, and likely many of Ring’s
shareholders, do.
We have
been evaluating Ring closely, including an in-depth analysis of the
Company’s management, Board structure, corporate governance,
and financial health, as well as a detailed analysis of the
Company’s assets by area, which in-depth analysis commenced
well-before our Schedule 13D filing. Through this exhaustive
analysis we have drawn certain conclusions and have definitive
thoughts about what can, and should, be done to re-establish the
Company as a leader in the conventional oil and gas space and
create value for all its shareholders.
First,
as demonstrated by our voting record at Ring’s most recent
annual meeting of shareholders, we believe wholesale changes are
required at the Board level. Our review of the current Board of
Directors reveals a high level of prior business dealings among the
directors, inter-relation among the directors, and clearly a lack
of fresh perspective and opinion on the Board. The Ring Board needs
fresh and diverse perspectives, strong voices representing the
interests of the shareholders rather than entrenched management,
and a willingness to require management to make necessary changes.
As a result, we believe that Ring should reconstitute its Board of
Directors immediately, appointing at least two new directors
selected by our investment group whether by replacing at least two
of the incumbents or increasing the size of the Board. The Board
must be guided by a clear understanding and appreciation of both
the risks facing Ring and Ring’s current lack of credibility
in the capital markets if the Company is to navigate its current
struggles, rebuild investor confidence, and work to enhance
shareholder value.
Second,
given the current crisis state of the Company, we believe that
Ring’s executive officers must be centrally located to reduce
costs and improve management interaction and oversight. We believe
that Ring must immediately consolidate all its disparate offices
and far-flung management to its headquarters in Midland, Texas. We
fail to recognize an acceptable reason as to why the Chairman (a
paid active employee) lives and works from California, the CEO
lives in Austin, Texas, and the CFO is in Tulsa, Oklahoma. Further,
Ring should close its office in Tulsa, Oklahoma as soon as
practicable. Not only does the company have no active oil and gas
operations in Oklahoma, the Tulsa office displays a clear conflict
of interest and poor discretion as the Company is renting this
space within a building co-owned by the Chairman and another
purportedly independent director. Each of these officers is a
fiduciary and should do the right thing for the Company and its
shareholders by relocating to Midland at their own expense. During
these turbulent times, all executive management needs to work
together in one central location to solve the Company’s
problems, with the added benefit of reducing G&A (travel costs,
office costs, office rental, etc.).
575 N. Dairy Ashford ● Suite 210 ● Houston, Texas
77079
|
AMERICAN RESOURCES, INC.
|
SK Energy LLC
|
Third,
after a review of Ring’s assets we believe that the Northwest
Shelf assets (Wishbone acquisition) should be the core focus of the
Company going forward. We also believe a good portion of
Ring’s Central Basin Platform assets, specifically many of
the assets in Andrews County Texas, represent base production but
would not justify the expenditure of further development capital at
this time. We applaud Ring’s recent efforts to divest
non-core assets in the Delaware Basin and would support a sale of
Ring’s assets in Northern Gaines County. Our concern is that
management has not presented any other material options to reduce
the current debt over-hang and fix the stressed balance sheet.
Ring’s current lack of consideration of, and failure to
aggressively pursue, all options available to the Company creates a
scenario where these assets may be sold in a “fire
sale” at significantly reduced prices to reduce debt to the
detriment of the long-term value of Ring’s
shareholders.
Fourth,
there is a significant credibility issue for the current management
team. We have heard from many Ring shareholders as well as other
operators active in the same area of operation, that they frankly
do not understand, agree with, or believe many of the statements
made by Ring’s management. This lack of credibility presents
a significant deterrent to recovery of shareholder value. As a
result, we believe Ring must refocus its investor relations and
public communications strategy. We are aware that this has been a
focus area for Ring over the past few months and we believe
progress has been made, but a fresh approach is required. We
believe it is imperative to refocus Ring’s narrative on
changing the story, which must be supported by actual, disclosable
fundamental changes at the Company. The current IR strategy has not
worked for the past few years and there is no reason to believe
that it will be effective going forward.
Fifth,
given the Company’s current lack of credibility in the
financial markets, Ring must embrace every opportunity to
demonstrate transparency and accountability at the highest levels.
Notably, Ring uses Eide Bailly LLP as their independent audit firm.
While Eide Bailly LLP has a good reputation serving private
companies, given the recent perceived credibility gap between
Ring’s results, public statements and Wall Street
expectations, we believe engaging a major market independent audit
firm would help the Company’s credibility. We also believe
that this change would hold the Board and its Audit Committee more
accountable for Ring’s financial reporting and
results.
We
believe the above-detailed near-term strategies and actions should
be implemented as soon as possible, with public announcement of the
same no later than March 31, 2020, with implementation of the same
following promptly thereafter, if not before. In addition, we
believe Ring must also aggressively pursue certain long-term
strategies over the next several quarters to enhance shareholder
value, including:
●
Combine with a
de-levered E&P company. By combining with a de-levered peer,
the Company can essentially outgrow its debt through the business
combination and create a larger public company with a stronger
balance sheet. There are many private equity-backed oil companies
and small to mid-sized public oil companies that could be ideal
merger candidates. In addition, combining with a peer would help
build economies of scale in operations and G&A, reducing
service costs and duplicative overhead. Through a business
combination, cash G&A savings alone could be worth millions of
dollars in savings per year, resulting in immediate value creation
and added yield to investors. In considering this option, the
possibility of wholesale changes to the current management of Ring
and its Board of Directors should not deter what is necessary and
in the best interest of creating shareholder value.
575 N. Dairy Ashford ● Suite 210 ● Houston, Texas
77079
|
AMERICAN RESOURCES, INC.
|
SK Energy LLC
|
●
Sell the Company to
a larger competitor at a significant premium to the current market
price. In our opinion, Ring is significantly undervalued compared
to the debt adjusted PDP PV10 of its assets. The fact that the
current share price trades at a discount is evidence that equity
holders are not being properly represented.
If the
Company does not initiate implementation of the suggested near and
long-term changes immediately, consider these holistic
recommendations and solutions over the coming months, and begin to
work with us to create value immediately, we will have no choice
but to go public with these recommendations and suggestions to the
broader shareholder base and work independently on behalf of all of
Ring’s shareholders to correct what we believe to be long
overdue corrective actions necessary to start rebuilding
Ring’s value which has been significantly and inexcusably
eroded in recent years while under Ring’s current Board and
management team’s watch. We look forward to your return
communication, noting that if we do not receive a satisfactory
response with proof of verifiable corrective actions being taken or
initiated by 5:00 p.m. (Central), Friday, February 28, 2020, we
will proceed with a broader communication to Ring’s
shareholders to seek necessary changes to Ring’s corporate
governance.
|
Sincerely,
/s/
J. Douglas Schick
J.
Douglas Schick
Chief
Executive Officer
American
Resources, Inc.
|
/s/ Dr. Simon Kukes
Dr.
Simon Kukes
Principal
SK
Energy LLC
|
About American Resources, Inc.
American
Resources, Inc. (“ARI”) is a Houston, Texas based oil
and gas investment, development and operating company focused on
acquisition of underexploited, distressed and/or undervalued oil
and gas assets and companies where ARI believes its involvement can
add value. ARI strives to maximize value through active management
of assets and/or board level participation in its corporate
investments.
About Dr. Kukes and SK Energy LLC
Dr. Simon
Kukes is a globally-renowned consultant for oil and gas
businesses in both the United States and Russia. He
has held various positions over the years, including the principal
of his personal investment company, SK Energy LLC, since April
2013, and currently is the largest shareholder, CEO and director of
PEDEVCO Corp., an NYSE-listed oil and gas company active in the
Permian and D-J Basins. Kukes boasts several awards and
achievements over his lifespan and his commitment to the oil and
gas industry has inspired him to publish more than 60 scientific
papers and two books on the oil and gas industry
of Russia and the United States. Kukes is also the
holder of more than 130 patents, primarily in Oil and Petrochemical
Processing.
About Ring Energy, Inc.
Founded
in 2012, Ring Energy is a Midland, Texas-based oil and gas
exploration, development and production company with current
operations in the Permian Basin of West Texas and is
recognized as the top producing oil basin in North
America.
SOURCE
Dr. Simon Kukes
575 N. Dairy Ashford ● Suite 210 ● Houston, Texas
77079