Ring Energy, Inc. Annual report [Section 13 and 15(d), not S-K Item 405]

Annual report [Section 13 and 15(d), not S-K Item 405]

LEASES

LEASES

12 Months Ended

Dec. 31, 2025

NOTE 3 — LEASES

The Company has operating leases for its offices in Midland, Texas and The Woodlands, Texas. The current Midland office is under a five-year lease, effective October 1, 2022 and ending September 30, 2027. The Woodlands office is currently under a 71-month (five years and 11-month) lease, effective May 9, 2023. The future payments for these office spaces are reflected in the future lease payments schedule below.

The Company has month to month leases for office equipment and compressors used in its operations on which the Company has elected to apply ASU 2016-02 (i.e. to not capitalize). The office equipment and compressors are not subject to ASU 2016-02 based on the agreement and nature of use. These leases are for terms that are less than 12 months and the Company does not intend to continue to lease this equipment for more than 12 months. The lease costs associated with these leases is reflected in the short-term lease costs within Lease operating expenses, shown below.

The Company has financing leases for vehicles. These leases have an initial term of 36 months at the end of which the Company owns the vehicles. These vehicles are generally sold at the end of their term and the proceeds are settled in cash or applied to a new vehicle.

Future lease payments associated with these operating and financing leases as of December 31, 2025 are as follows:


	2026		2027		2028		2029		2030		Thereafter		Total
Operating lease payments	$	636,649	$	460,497	$	250,606	$	149,628	$	—	$	—	$	1,497,380
Financing lease payments	803,745		465,880		159,374		—		—		—		1,428,999

The following table shows the weighted average remaining lease term and the weighted average discount rate for the Company's leases as of the dates indicated.


	As of December 31,
	2025		2024
Operating leases
Weighted average remaining lease term (in years)	2.71		3.45
Weighted average discount rate	4.50	%	4.50	%

Finance leases
Weighted average remaining lease term (in years)	1.99		1.85
Weighted average discount rate	7.50	%	7.31	%

The following table represents a reconciliation between the undiscounted future cash flows in the table above and the operating and financing lease liabilities disclosed in the Balance Sheets:


	As of December 31,
	2025		2024
Operating lease liability, current portion	$	586,614	$	648,204
Operating lease liability, non-current portion	819,223		1,405,837
Operating lease liability, total	$	1,405,837	$	2,054,041
Total undiscounted future cash flows (sum of future operating lease payments)	$	1,497,380	$	2,224,840
Imputed interest	91,543		170,799
Undiscounted future cash flows less imputed interest	$	1,405,837	$	2,054,041

Financing lease liability, current portion	$	730,564	$	906,119
Financing lease liability, non-current portion	593,146		647,078
Financing lease liability, total	$	1,323,710	$	1,553,197
Total undiscounted future cash flows (sum of future financing lease payments)	$	1,428,999	$	1,667,763
Imputed interest	105,289		114,566
Undiscounted future cash flows less imputed interest	$	1,323,710	$	1,553,197

The following table provides supplemental information regarding lease costs in the Statements of Operations for the years ended December 31, 2025, 2024, and 2023.


	2025		2024		2023
Operating lease costs	$	700,362	$	700,362	$	541,801
Short-term lease costs (1)	$	4,714,675	$	4,083,088	$	5,096,723
Financing lease costs:
Amortization of financing lease assets (2)	$	925,619	$	1,058,398	$	803,721
Interest on financing lease liabilities (3)	$	107,754	$	121,293	$	101,269

(1)Amount included in Lease operating expenses

(2)Amount included in Depreciation, depletion and amortization

(3)Amount included in Interest (expense)

During the years ended December 31, 2025, 2024, and 2023, the Company recorded a gain (loss) on disposal of assets, which was impacted by the sale of leased vehicles, as follows:


	For the years ended December 31,
	2025		2024		2023
Sale of owned vehicles	$	(6,974)	$	(14,239)	$	(132,109)
Sale of leased vehicles	453,374		103,932		44,981
Gain (loss) on disposal of assets	$	446,400	$	89,693	$	(87,128)