Midland, TX-based Ring Energy Inc. grew production 11% year/year in the fourth quarter as it continued its shift to horizontal drilling in the Permian Basin's Central Basin Platform (CBP).

In November, the exploration and production company announced a $70 million preliminary capital budget including 22 new horizontal wells in the CBP, along with six new vertical development wells and infrastructure upgrades. Ring's 2017 budget also includes eight new vertical wells in the company's Delaware Basin asset base.

In December, Ring released encouraging initial results from its three-well San Andres horizontal drilling program in the CBP. The results are still looking good, CEO Kelly Hoffman said this week.

"We are very pleased with the initial results we are seeing from our 2017 horizontal well drilling program, as they are meeting and/or exceeding the results we received on our pilot three-well horizontal drilling program at the end of 2016," Hoffman said. "Although we didn’t allocate funds in the preliminary 2017 budget for a horizontal development program on our Delaware Basin asset, we are very excited about the prospects of such a program based on the information and core samples we retrieved by drilling two vertical wells to the base of the Brushy Canyon shale."

Ring ended the year with 53,000 gross (32,000 net) acres in the CBP, with an estimated 43,000 gross (26,000 net) horizontal acres and over 400 gross horizontal drilling locations.

Net production for the fourth quarter totaled 2,569 boe/d, up from 2,312 boe/d in the year-ago quarter. Average sales prices also increased year/year to $41.59/boe, compared with $34.61/boe in 4Q2015.

Oil and gas revenues totaled $9.8 million for the quarter, up from $7.4 million in 4Q2015.

Ring saw reduced operating costs for the quarter, with lease operating expenses averaging $12.05/boe, down from $13.95/boe in the year-ago period. General and administrative expenses averaged $8.48/boe, down from $10.44/boe in 4Q2015. Depletion, depreciation and amortization expenses fell to $12.44/boe from $17.15/boe in the year-ago period.

Ring reported a net loss of $477,006 (minus 1 cent/share) for the quarter, compared with a net loss of $7.47 million (minus 25 cents/share) in the year-ago quarter.

For full-year 2016, Ring reported a net loss of $37.6 million (minus 97 cents/share), compared with a net loss of $9 million (minus 32 cents/share) in 2015. The 2016 net loss included a pre-tax non-cash $56.5 million ceiling test impairment charge.