This week’s Stock of the Week is an experienced and efficient company that can profit even if its sector doesn’t.

Energy Growth

Ring Energy, Inc. (REI) explores for and produces oil and natural gas entirely within the US. Its focus is the Permian Basin of West Texas, one of the nation’s longest-standing and largest petroleum-producing areas.

Ring has an especially efficient method of horizontal drilling, which is now the main means of extracting oil from areas originally opened up through traditional vertical drilling. Ring has drilled the most horizontal wells in the highly productive San Andres residual oil zone. Its extraction cost is less than $20/barrel, so even if oil prices again fall from current levels, Ring should be able to maintain profits and production—net production was 62% higher in 2017 than in 2016.

Management is highly experienced: The firm’s cofounders previously cofounded Arena Resources, which they built up and then sold to SandRidge Energy in 2010 for $1.6 billion. Ring’s revenue was $31 million in 2016. When reported for 2017, it will likely be given as $65 million. It should grow to $138 million this year.

Fiscal year: December. Earnings per share: 2018 est./$0.61…2017 est./$0.20…2016/–$0.97.

Daniel S. Perkins is executive vice president of Perkins Capital Management, Wayzata, Minnesota, which manages $120 million, and co-portfolio manager of the $6.2 million Perkins Discovery Fund (PDFDX). PerkinsCapital.com

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