Q4 2023 Ring Energy Inc Earnings Call

Participants

Al Petrie; Investor Relation; Ring Energy Inc

Paul Mckinney; Chief Executive Officer and Chairman of the Board; Ring Energy Inc

Travis Thomas; Chief Financial Officer, Executive Vice President, Treasurer, Company Secretary; Ring Energy Inc

Marinos Baghdati; Executive Vice President of Operations; Ring Energy Inc

Jeff Grampp; Analyst; Alliance Global Partners

Neal Dingmann; Analyst; Truist Securities, Inc.

Noel Parks; Analyst; Tuohy Brothers Investment Research, Inc.

Jeff Robertson; Analyst; Water Tower Research LLC

Presentation

Operator

Good morning, and welcome to the Ring Energy Fourth Quarter and Full Year 2023 earnings conference call. All participants will be in listen only mode. Should you need assistance, please signal the conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions to ask a question, you may press star then one on your telephone keypad. To withdraw your question, please press star then two. Please note this event is being recorded. I would now like to turn the conference over to Al Petrie, Investor Relations for rain energy. Please go ahead.

Al Petrie

Thank you, Operator, and good morning, everyone. We appreciate your interest in Ring Energy. We'll begin our call with comments from Paul McKinney, our Chairman of the Board and CEO, who will provide an overview of key matters for the fourth quarter and full year 2023. As well as our outlook and will then turn the call over to Travis Thomas, Ring's Executive VP and Chief Financial Officer, who will review our financial results. Paul will then return with some closing comments before we open the call for questions.
Also joining us on the call today and available for the Q&A session are Alex Dyes, Executive VP of Engineering and Corporate Strategy; Marinos Baghdati, Executive VP of Operations; and Steve Brooks, Executive VP of Land, Legal, Human Resources, and Marketing.
During the Q&A session, we ask you to limit your questions to one and a follow-up. You're welcome to reenter the queue later with additional questions.
I would also note that we have posted an updated corporate presentation on our website during the course of this conference call, the Company will be making forward-looking statements within the meaning of federal securities laws. Investors are cautioned that forward-looking statements are not guarantees of future performance and those actual results or developments may differ materially from those projected in the forward-looking statements.
Finally, the company can give no assurance that such forward-looking statements were proved correct. Ring Energy disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise. Accordingly, you should not place undue reliance on forward-looking statements. These and other risks are described in yesterday's press release and in our filings with the SEC. These documents can be found in the Investors section of our website, www.ringenergy.com. Should one or more of these risks materialize, or should underlying assumptions prove incorrect, actual results may vary materially.
This conference call also includes references to certain non-GAAP financial measures. Reconciliations of these non-GAAP financial measures to the most directly comparable measure on the GAAP are contained in yesterday's earnings release.
Finally, as a reminder, this conference is being recorded. I would now like to turn the call over to Paul McKinney, our Chairman and CEO.

Paul Mckinney

Thanks, Al, and thank you to everyone joining us today and your interest in Ring Energy.
Looking back to 2023 through the very good year, we ended at establishing new records during the fourth quarter and the full year, both operationally and financially. As we shared in our earnings release, we grew our year-over-year production related sales volumes by 47%. Our adjusted EBITDA by approximately 21% in our adjusted free cash flow by 30%. This was a direct result of our team's ongoing efforts related to the key aspects of our growth strategy.
The primary contributors to our success are directly related to the successful integration of the two acquisitions executed over the past 18 months, Stronghold energy to the founders, oil and gas assets, acquisitions, our disciplined and highly successful capital spending program also contributed significantly, as did our continuous focus on reducing operating.
These acquisitions have further established our strategic foothold in the Central Basin Platform of the Permian Basin and have significantly increased our undeveloped inventory of highly economic drilling locations.
Another contributor to our success was the divestiture of certain non-core assets located in the Delaware Basin. The operated assets in the state of New Mexico and a few assets in Gaines County, Texas. As a result, all our operated acreage is now located in the business-friendly state of Texas. Our average operating costs are lower since the assets sold.
We had higher per BOE operating costs than most of our retained assets, and we moved the undeveloped opportunities of these assets that were challenged to compete in our portfolio to operators that value them higher. The outperformance of our fourth quarter capital spending program is largely due to new well production performance that brought our sales volumes near the high end of guidance, providing for an 11% increase in our daily BOE production over the third quarter of 2023.
During the fourth quarter we invested $38.8 million in capital expenditures and drilled four horizontal wells, three in the CBP. and one in the Northwest Shelf and three vertical wells in the Central Basin Platform, we completed 10 wells, six in the CBP and four in the Northwest Shelf. Additionally, costs of capital workovers, infrastructure upgrades and leasing were also included.
For the year ended December 31st, 2023 we spent $152 million, which included cost to drill, complete and placed on production 20 horizontal wells, 14 in Northwest Shelf and six in the Central Basin Platform and 11 vertical wells in the Central Basin Platform. Also included in the full year capital spending were costs for capital workovers, infrastructure upgrades recompletions and leasing ring also participated in the drilling and completion of five non-operated wells in the Northwest Shelf and Central Basin Platform.
Adjusted EBITDA was a record $65.4 million for the fourth quarter, which represents a 12% increase over the previous quarter of $58.6 million and a 16% increase over the fourth quarter of 2022, which was $56.3 million. Adjusted free cash flow for the fourth quarter was a record $16.3 million compared to $6.1 million in the third quarter of 2023 with a 165% increase, primarily due to increased revenue and lower capital spending in the fourth quarter.
Fourth quarter 2023, adjusted free cash flow increased 197% from $5.5 million for the fourth quarter of 2022. Adjusted cash flow from operations was a record $55.1 million for the fourth quarter compared to $48.5 million for the prior quarter and $47.4 million for the fourth quarter of the prior year 2022.
With respect to our cash return on capital employed in 2023, our capital spending program generated slightly more than 17% return at this point. And on behalf of the Board of Directors and management team, I would like to thank our employees for their hard work and dedication for the success we enjoyed in 2023 and to express my excitement for the opportunity to continue working on their side in the future as we further execute our value-focused proven strategy.
With respect to our reserves, we ended 2023 with SCC total proved reserves of $129.8 million barrels of oil equivalent versus $138.1 million barrels of oil equivalent. At the end of 2022, we benefited from reserve additions of $8.2 million barrels of oil equivalent from acquisitions and $4.8 million BOE from our internal development efforts.
Offsetting these increases were $6.6 million barrels of oil equivalent of production, $5.7 million barrels of oil equivalent for the sale of non-core assets, $3.7 million barrels of oil equivalent related to changes in performance and other economic factors, and $5.3 million or million barrels oil equivalent for reductions in year-over-year prices.
In short, a significant driver in the reduction in our year-end SEC proved reserves was associated with decreased SEC prices. The PV-10 of our total proved reserves was approximately $1.6 billion as of year end, assuming SEC prices.
Turning to the balance sheet, we paid down an additional $3 million of borrowings on our revolver in the fourth quarter, the level of debt reduction was impacted by the final net payment for the founders' acquisition in December of approximately $11.9 million.
I would note that through year end 2023, we paid down $30 million of borrowings since the closing of the transaction in August, which had a final net purchase price of approximately $62 million. And finally, we entered 2024 with liquidity of approximately $175 million, including a recently reaffirmed borrowing base of $600 million. Our debt at year end was $425 million. The company continues to remain focused on cash flow generation and reducing our debt.
Looking at our guidance for 2024. While Travis will go through more details in his comments, I wanted to provide a high level overview and strategic rationale driving our full year plans. The immediately accretive 2022 stronghold and 2023 founders acquisitions materially improved our size, scale and drilling inventory. This backdrop provides key support and flexibility as we execute a 2024 drilling program specifically designed to organically maintain or slightly grow our oil production.
Our current plan is to drill an average of five horizontal and six vertical wells per quarter as in the past, we are focused on developing our highest rate of return inventory while also investing in necessary field infrastructure and other critical capital projects. For 2024, we are planning a two rig phased drilling program, including one horizontal and one vertical rig.
We are using a phased versus continuous drilling approach in 2024 to provide maximum flexibility to react to commodity price fluctuations and other market conditions in the current environment. After Travis provides his comments, I will come back with some additional thoughts on our business position and where we are headed.
With that, I'll hand it off to Travis to discuss our recent financial results and outlook in more detail. Travis?

Travis Thomas

Thanks, Paul, and good morning, everyone. Paul summed it all up nicely. But to further recap, our fourth quarter and full year 2023, operational and financial results materially benefited from our two acquisitions completed over the past 18 months. Also driving our results was the successful execution of our 2023 drilling program, complemented by additional efficiencies achieved through our expanded scale and leveraging the best operational practices.
We also executed targeted divestitures of non-core assets. We might sound like a broken record, but that's what we did. We broke records in the fourth quarter and full year of 2023. We had record sales volumes, record adjusted EBITDA, record adjusted cash flow from operations and record adjusted free cash flow.
So here are my takeaways. We drove record adjusted EBITDA and adjusted free cash flow for Q4 and 2023, despite lower overall realized pricing. Supporting our results was an 11% increase in Q4 sales volumes and a 47% increase in full year sales volume.
We also focus on growing crude oil production as a percent of product mix, given the enhanced economics and we'll continue to do so in 2024, we paid the final $12 million deferred payment in December, and we were able to pay down $3 million on our revolver during during Q4. We have been extremely pleased with the results from the founders acreage.
And through year end, we paid down $30 million of debt since closing on the transaction in mid-August, with the net purchase price for founders of around $62 million. We are quickly recouping our investment. As in the past, we will continue to focus on paying down debt as fast as appropriate.
Next, we completed our successful 2023 development program. Our 2024 drilling program has been underway since January, and we look forward to keeping our stockholders apprised of our progress.
With that background, let's hit the other key highlights, I'm going to focus my comments on the most important sequential quarterly results. We benefited from a full quarter of production from our founders acquisition completed in May of mid-August and a full year of production uplift and scale provided by the stronghold acquisition that closed in August of 2022.
In addition, our ongoing field development efforts continued to drive further cost efficiencies. During the fourth quarter, we sold 19,400 BOE per day at the higher end of our guidance range, partially offsetting the increase in sales volumes was a lower overall realized pricing of $56 and $0.01 per BOE, a 4% decrease from the third quarter.
Our fourth quarter average crude oil price differential from nine XDETI. futures pricing was a negative $0.92 per barrel versus a negative $0.78 per barrel for the third quarter. This was mostly due to the August WTIWTS. decreased $1.7 per barrel, offset by the August CMA role to increase by $0.85 per barrel on average for the third quarter.
Our average natural gas price differential from a mix futures pricing for the fourth quarter was a negative $3.12 per Mcf compared to a negative $2.45 per Mcf for the third quarter. Our realized NGL price for the fourth quarter averaged 14% of WTI compared to 16% for the third quarter combined result was revenue for the fourth quarter of $99.9 million, let's call it even $100 million, a 7% increase from the third quarter despite the lower overall realized pricing environment. For full year 2023, we posted revenue of $361 million, almost $1 million a day of 4% increase year over year.
LOE was $18.7 million versus $18 million for the third quarter. On a per BOE basis, LOE decreased sequentially 6% in the fourth quarter to $10.50 versus $11.18 per BOE for the third quarter. The absolute increase in LOE was mostly driven by the full quarter of the founders' assets, but the higher production reduced the per-BOE rate.
I would note that our Q4 LOE per BOE results were at the low end of our guidance of $10.50, $11 per BOE. Cash G&A, which excludes share-based compensation and transaction related costs, was $3 per BOE for Q4 versus $3.15 per BOE for the third quarter. We were pleased to see a 24% year-over-year decrease in cash G&A per BOE costs. Our fourth quarter results include a gain on derivatives of $29 million versus a loss of $39 million for the third quarter.
You may recall we discussed during our last call that prices at the end of the third quarter were higher, which resulted in a mark-to-market derivative loss than the decline in prices in the fourth quarter, reverset to a mark-to-market gain. We recorded an income tax provision of $7.9 million during Q4 2023 versus a benefit of $3.4 million in the third quarter, which was primarily associated with the increase in pretax book income.
Finally, for Q4, we reported net income of $50.9 million or $0.26 per diluted share. Excluding the estimated after-tax impact of pretax items, including non-cash unrealized gains and losses on hedges, share-based compensation expense and transaction costs.
Our fourth quarter adjusted net income was $21.2 million, or $0.11 per diluted share. This is compared to third quarter of 2023 with a net loss of $7.5 million or a negative $0.04 per diluted share and adjusted net income $26.3 million or $0.13 per diluted share.
Moving to our hedge position. For 2024 we currently have approximately 2.1 million barrels of oil hedged or approximately for 45% of our estimated oil sales. Based on the midpoint of guidance, we also had 2.6 billion cubic feet of natural gas hedged or approximately 43% of our estimated natural gas sales based on the midpoint for a quarterly breakout of our hedge positions for 2024, please see our earnings release and presentation, which includes the average price of each contract type.
Turning to the balance sheet, our primary focus remains the same, reducing debt to better position ourselves to ultimately provide a meaningful return of capital to our shareholders. At year end 2023, we have $425 million drawn on our credit facility with a recently reaffirmed borrowing base of $600 million. We had $174.2 million available net of letters of credit.
Combined with cash, we had liquidity of $175 million with a leverage ratio of 1.62 times, only slightly higher than year-end 2022, despite additional borrowings for the founders acquisition. As a reminder, from transaction completion in mid-August of 2023 through the end of the year, we paid down debt by $30 million. Another clear indication of the cash flow generation afforded by the our significant asset base and dedication to improving our long-term financial profile.
To be clear, we will continue to pull all the levers at our disposal to further reduce our debt position, including driving further growth in operating cash flow through successful execution of our targeted 2024 development program and further cost reduction.
Let's pivot to our 2024 outlook. In summary, during 2024, we are utilizing a phased versus continuous drilling program approach that better maximizes our ability to react to changing market conditions and adjust spending levels as appropriate. Our focus is on maintaining or slightly growing BOE per day production levels, while continuing to grow our crude oil sales.
We expect to spend 135 to (technical difficulty) despite capital spending between $37 million to $42 million for the first quarter. We also anticipate full year 2024 LOE to be between $10.50 and $11.50 per BOE and between $10.75 and $11.25 for the first quarter. Our projects and estimates are based on assumed WTI prices of 70 to $90 per barrel and Henry Hub prices of $2 to $3 per MCF.
So with that, I will turn it back to Paul for his closing comments. Paul?

Paul Mckinney

Thank you, Travis. We view our record results for Q4 and full year 2023 as clear indications of the long-term potential of our strategy, the quality of our assets and a low breakeven cost of our undeveloped drilling inventory. The opportunity provided by our expanded business plan and our focus remains the same. As in the past, we will continue to pursue operational excellence and further cost efficiencies through the business, both on the capital and operating cost fronts.
We will continue to high-grade and execute our targeted drilling and development campaign focused on our highest rate of return prospects to organically maintain or slightly grow our production while maximizing cash flow generation. We will continue to focus on improving the balance sheet by reducing debt. We will continue to pursue growth through the evaluation and execution of acquisition opportunities to provide immediate accretion to our ring stockholders and improve our balance sheet.
In summary, we remain committed to our value-focused proven strategy, which we believe better prepares the company to manage the risks and uncertainties associated with our industry and should generate sustainable and competitive returns for our stockholders. The focus of our strategy remains on achieving the necessary business, size and scale that positions our company to sustainably return capital to stockholders.
I want to take the time to thank our stockholders for their trust in us and for all of you who have joined us on the call today.
And with that, we will turn this call over to the operator for questions. Operator?

Question and Answer Session

Operator

We will now begin the question and answer session. (Operator Instructions)
Jeff Grampp, Alliance Global Partners.

Jeff Grampp

Good morning guys, thanks for the time. You made the point a few times in the release as well as on the call here to kind of differentiate between the space versus continuous drilling programs. I wanted to spend a minute there is that in the management of the CapEx spending and the pace do you guys expect that to maybe create some some lumpiness in quarterly production capital spending? And it sounds like the main benefit there is just to give you a little bit more nimbleness to manage the volatility in commodity prices. But yes, just any other additional commentary there would be helpful.

Paul Mckinney

Yes. I'll do a first and then I'll turn it over to Marinos. Yes, the things that we're trying to manage right now as we're really trying to maximize our free cash flow generation and focus on paying down debt. If we keep a continuous rig going all year long. The burn rate brings us It increases our production, but it also on no limits the amount of debt that we can pay down. And so that's one consideration.
The other one is because of the volatility we've experienced over the last year, actually several years, we want to be nimble and we want to be able to respond. And so by gone with the phased drilling contracts, we can make decisions from quarter to quarter.
The consequence of that is and some quarters might be slightly higher than others. It's all a function of the timing of when you actually drill the wells and when you bring them on. And so yes, the lumpiness may very well continue to be there you want to add anymore?

Marinos Baghdati

Not just want to reemphasize that with the phase drilling program, we continue our rigs being well-to-well contracts so we can we can stop at any moment if we decide to or could you just continue extending the contract for future. Well, so it gives us a lot of flexibility which we like.

Jeff Grampp

Great, good to hear. Okay. And then for my follow-up. The return of capital obviously remains a big goal that you guys continue to work towards. I assume it's durable balance sheet and large enough kind of operating scale are probably two of the bigger items that you guys are working on to kind of achieve that upon curious, are there any specific KPIs that you guys are working towards in that regard or or anything else that you guys kind of measure that would, I guess kind of effectively gets you guys declined to that summit to a point where you'd be able to return capital to shareholders? Like what are the main KPIs that we should be tracking towards today?

Paul Mckinney

Yes, that's a really good question. We get that question pretty often actually we don't have at this point specified any specific KPIs. We look at every opportunity out there. We know that there's a long term go on. We believe that the marketplace has made it very clear that the investors expect the oil and gas industry to return capital to their shareholders. And so we're working on that right now. We believe that our debt levels are just too high if we were to do a stock buyback or pay out a dividend, the big issue there is is our debt. And so but with respect to a specific KPI, I don't really know. We haven't identified that.

Jeff Grampp

That's fair. Thanks for the time.

Operator

Neal Dingmann, Truist.

Neal Dingmann

Good morning. My first question is on the founders assets specifically. I'm just when it seems like they're doing quite good. And I'm just wondering as you as you and the team look at them today versus kind of what they're doing versus your initial estimates, I'm just wondering can you maybe give me a broad band of broad results of sort of what what has improved? It certainly seems like they have. I'm just wondering maybe how they look since you initially were looking at them? And then secondly, I'm just wondering when it comes to sort of completions, what's what's changed is that is that what has improved in these or what's kind of been the improvement on these assets?

Paul Mckinney

Yes, again, Marino and I will both tackle this up. If you recall what our intentions were when we made the acquisition, we wanted to get our arms around the operating costs and there production methods because we felt like we could make improvements across the board there. And so we concentrated on the water-handling initially. And we also concentrated on the production practices. We have moved water to and dispose of water differently because of we just believe that our operations could reduce costs, and we've done that very successfully.
The other thing we wanted to do, we spent quite a bit of time studying what has been done in the past in terms of drilling and completion practices so that when we did go out there to drill and we have we've drilled several wells out there, it's kind of premature to talk about them. But I have to say that we're very, very impressed with the results.
And so our overall our impression of the founders acquisition is that it is going to overperform the forecast and the predictions we use it when we first assess the value of it. We also believe there's additional drilling locations out there now that we've looked at it closer than what we originally booked than what we originally shared with our with our investors. You want to go into any more detail?
No, just to say that our drilling and completion costs on the first few wells in the first quarter, we've exceeded expectations even the ones that we set. And so lower costs are obviously going to improve the economics of those wells. We're very excited on the performance so far also when we first got our hands around the project, our team did a really good job of identifying some small capital workovers where we lowered our ESPs closer to to drop the bottom hole producing pressures in that stabilized production significantly. So we're exceeding what we thought how we thought the assets were declining just on the base production. So we're very, very happy and excited about the asset.
Yes. that great change or any decline on that base rate is pretty substantial. The work that they did is just what I call the blocking and tackling of a very conscientious production engineering team. They've done a great job evaluating things out there, like he mentioned, loan, the pumps, but surprising actually that the base production has responded so favorably to our operations and really has extended of decline. So I'm really, really happy with that acquisition.

Neal Dingmann

Great to hear the details by my guys and then my second question, some of you did talk about in the prepared press release was just on the refrac and workover opportunities. I'm just wondering, I think you had mentioned I assume this will continue to be pretty large part of the overall plan. And if so, are there specific areas that are you don't more opportune for this?

Paul Mckinney

I don't know that we're really focused on re-fracs, Neil. I will say that we are the things that we're tackling that where we spent a lot of time. We're trying to remove all of the infrastructure limitations to programs in both the North and the Northwest Shelf also in the Central Basin Platform portion of the Northern and legacy assets and also in the south because all of these areas have very, very economic undrilled opportunities and freeing ourselves from those limitations or gives us more flexibility in terms of where we spend the capital.
And so I think the primary thing that we've been working on instead of re-fracs is really eliminate an infrastructure and then like rails kind of pointed out, also reducing costs. And so the point that he made about the first couple of founders wells we drilled out there. We believe that we can drill them cheaper than the than the founders organization.
We're drilling them and then now our actual costs are actually coming in substantially less than what we actually have done for. So we're very happy with all the efforts has a combination of changing making changes to the way we do things and also the impact and effect of the change in the trajectory of inflation. So costs on many things that come down. So there's a variety of things that allowed us to perform as well as we are.

Neal Dingmann

Yes, that makes sense. That's what I meant takes on it. And then on that infrastructure, that's the point I was getting at. Are you now getting to a point where you think most of the structure is built up or is that built out or is that something that will go on most of this year still?

Marinos Baghdati

Yes, we were there's a few batteries that we have to build based on our 2024 capital program. But in general, all the bottlenecks, you know that we were facing when we first especially down in the south when we first took over the assets, we've pretty much knocked out, and that's really helped a lot on the capital efficiency that we we've been seeing.
And then we've also emphasized to the backbone of our what I consider the backbone of our organization, the boots on the ground guys in the field on that, taking ownership of our operations and making it theirs. So where they're looking a little bitty things that one at a time don't really significantly change things. But when you add everything together, we're seeing significant improvements in our operational efficiency and in conducting our operations safely. So we're really proud on how we're generating that culture.

Neal Dingmann

Great details. Thanks guys so much.

Operator

Noel Parks, Tuohy Brothers.

Noel Parks

Hi, good morning and good morning all on just a couple of things. You mentioned a few minutes ago that you won believe that there are going to be some additional drilling locations out there than you had originally modeled. As wondering is that a function of density or just a function of just the size of the individual targets here you're finding?

Paul Mckinney

Yes, that's that is pushing the boundaries out a little bit on the area that is developable and also includes additional downspacing, so as both market.

Noel Parks

Great. Okay. And, I did notice of speaking of locations that are in the reserve breakout it's in the PDNP category. It seems that the young and just the aggregate appeared a little gassier. And I just wondered, was that due to it's just production mix and in locations in a particular area or or anything in particular, do you attribute that to?

Paul Mckinney

Yes, if you go if you recall, the stronghold acquisition brought more cash more associated gas production Welcome to our to our portfolio. And the founders acquisition is now, you know, getting more or bringing us back to be be and so on Europe.

Marinos Baghdati

I will also say to that, especially in the founders, we've really focused again on the field operations. And we've actually been able to increase our gas production or sales compared to the previous team that the founders that have the asset. So that's also slightly increased our gas to oil ratios there at that.

Noel Parks

Okay, great. Thanks a lot.

Operator

(Operator Instructions)
Jeff Robertson, Water Tower Research.

Jeff Robertson

Thanks. Good morning, Paul and Marinos. You mentioned in Q4 23 that you had some performance that helped on production, I think, especially on oil, was that related to well performance, Marinos? Or is that related to some of the field operations that you all started to implement on the acquired assets. Can you talk about how that plays into the guidance that you have out for 2024?

Marinos Baghdati

Sure. In the first part of your question, it's a little bit of both. You know, we've continued in the fourth quarter. We developed some horizontal wells in the Central Basin Platform in our legacy Andrews area that outperformed expectations I would say.
But in the base production, we were able to do a little bit better than that anticipated because if we didn't really have a lot of cold weather in the fourth quarter of 2023, but we did experience some in the 1st month of 2024 in January, and we had a really about 12 days of a really strong cold front come through that affected our production early on in the quarter and that led to that of what we guided towards. So I hope that answers the question.

Paul Mckinney

There's a couple of other things, Jeff, and this goes back to the lumpiness of a continuous versus a phase drilling program. If you recall, we were a little disappointed in our production levels last summer. And so at the towards the end of the year, we went to a continuous program of trying to catch up.
And so the timing of go into that continuous program really helped us out in the fourth quarter and that kind of boosted the production. And so again, it goes back to managing continuous versus days drilling, but sort of the fourth quarter actually benefited from from additional drilling that occurred in the third quarter where those wells came on in the fourth quarter.

Jeff Robertson

Part of how you constructed your 2024 development plans, it sounds like you're focusing more on on higher margin oil production. Does that mean you are you will it be a noticeable or material impact on free cash flow per dollar of capital spent. As you think about how that capital program for 24 works out and the ability to delever over the course of the year.

Paul Mckinney

That's exactly right. So we are focused on maximizing our free cash flow generation. And one of the things we've learned, especially with natural gas prices where they are with the discounts to the wellhead where we're actually having to pay to take gas. We're laser focused on maximizing our oil production to maximize that free cash flow generations. So pay down debt.

Jeff Robertson

Thank you.

Operator

This concludes our question and answer session. I would like to turn the conference back over to Paul McKinney for any closing remarks.

Paul Mckinney

Thank you Operator. Hey, on behalf of the management team and the Board of Directors. I want to thank everyone for listening in and participating in today's call. We appreciate your continued support of the company, and we look forward to keeping everyone apprised of our progress. Thank you again for your interest in ring and have a great day and have a great weekend.

Operator

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.