Ring Energy Inc. (“REI”) completed its acquisition (the “Transaction”) of the assets of privately held Stronghold Energy II Operating LLC and Stronghold Energy II Royalties LP (collectively, “Stronghold”). Stronghold’s operations are located primarily in Crane County, Texas, and focused on the development of approximately 37,000 net acres in the Permian Basin’s Central Basin Platform (“CBP”).
Due to the timing of the Transaction closing, the Company lacked the appropriate bandwidth to focus on the Transaction as the team was busy with their regular quarterly SEC filing. Additionally, the structure of the Transaction presented several technical accounting complexities, and due to the size of the Transaction, the Company needed to file pro forma financial statements under SEC rules. REI needed to partner with an experienced advisory firm to provide bandwidth and technical expertise to help on several fronts associated with the Transaction.
Opportune’s Valuation, Complex Financial Reporting, and Transactional Due Diligence practice areas were engaged to perform the following functions in connection with REI’s acquisition of Stronghold’s assets and the associated hedge book.
Valuation - Opportune’s Valuation team assisted with purchase price allocation services and the estimation of the fair value of oil and gas properties by reserve category.
Complex Financial Reporting - Opportune’s Complex Financial Reporting team assisted with technical accounting and financial reporting advisory, including the following:
Transactional Due Diligence – Opportune’s Transactional Due Diligence team assisted with the following:
Leveraging its cross-functional teams of Valuation, Complex Financial Reporting, and Transactional Due Diligence, Opportune added value by helping the Company gain comfort over seller-provided information, as well as current systems and methodologies used to account for the fair value of the oil and gas properties, SEC reporting requirements, and final settlement statement review in support of the Transaction. With the help of Opportune, REI was able to file its pro forma financial statements on time and was also able to guide the Company through its auditor review process.