Okay. Thank you. The magic touch. All right. Good afternoon, everyone. I am pleased to introduce our next speaker, Paul McKinney. Paul has served as Ring Energy's Chief Executive Officer and Chairman of the Board for nearly five years. His most recent role prior to joining Ring was President, CEO, and Director at SandRidge Energy. Prior to SandRridge, Mr. McKinney was President and Chief Operating Officer for Yuma Energy, Inc., after serving as Yuma's Executive Vice President and Chief Operating Officer. Prior to Yuma, Mr. McKinney served as Region Vice President, Gulf Coast Onshore, for Apache Corporation, where he was responsible for the development and all operational aspects of the Gulf Coast region for Apache. He also served as Vice President and Director, Acquisitions and Investitures, for Tristone Capital, Inc.
He commenced his career with Anadarko Petroleum Corporation and held various positions with Anadarko over a 23-year period, including his last title as Vice President of Reservoir Engineering, Anadarko Canada Corporation. Mr. McKinney entered the U.S. Air Force upon graduating from high school and continued in the Air Force Reserves while attending college. He attended Louisiana Tech University and graduated with a Bachelor of Science degree in Petroleum Engineering. Please join me in welcoming Paul McKinney.
I know what a lot of you are thinking. You're probably thinking, "Paul had a hard time keeping a job." Let's see how this works here. Okay, very good. I really appreciate the opportunity to be here with Intercom. Intercom has really grown and become one of the premier conferences here in the United States, and it's really great to be back here again this year. I'm very grateful for all of you and your interest in Ring Energy. We're growing this company the best we can in tough times, and I think we're doing a really good job. I hope that you walk away with that same impression when we're done. This is our forward-looking statements and non-GAAP financial measures. I encourage you all to read those. Those are important.
At this point, I would like to address those of you in the audience that do not know very much about Ring Energy. We are a, I'm going to grab this. It's probably easier for me to grab this. There we go. We are an independent oil and gas company headquartered in The Woodlands, Texas, and our focus is in the Permian Basin and more specifically in the southern part of the Northwest Shelf and the Central Basin Platform. You can see our operating position all up and down the platform in the southern part of the shelf on the slide. Last quarter, we averaged just a little bit over 21,000 bbls a day. Our proved reserves at the end of last year was 134 million bbls with right at or just under $1.5 billion worth of value at SEC prices. Since that time, we've added the Lime Rock acquisition.
We added another 12 million bbls, another $160 million worth of proved value. You can see our net acreage position there. One of the key components of our strategy in going forward is we really like high operational ownership. We also like high net revenue interests. It helps with a lot of things. The green box on the side there highlights some of the key attributes associated with our strategy, but just to put it all in a nutshell, we have specialized in taking the technologies that were originally developed for the shales, both in the Midland and Delaware basins, and we're applying those technologies to conventional rock. Conventional rock that in times past was believed to be marginally economic or non-economic at all. What we've found is by applying these new technologies to the previously considered uneconomic conventional rock, we've been able to generate significant returns.
The advantages of those, many of those conventional zones were at shallower depths, so the wells cost less to drill. Because they have higher permeabilities and porosities than the shales, you don't have to put as large or extensive a frack or as many fracks, and so your completions are less costly. Even though these wells don't come on at the big, big producing rates that many of these unconventional wells do, when you look at the economics, our returns are very, very competitive and oftentimes superior. This is what I call our scorecard or our report card. This is something that we do every quarter. We compare our results, good or bad, versus our prior periods. For the last two quarters, we've had two very strong quarters, and this highlights what we just announced just recently, our second quarter scorecard.
We set record production as a result of the Lime Rock assets that we integrated in during the first quarter. We averaged a little over 21,000 bbls a day, like I said, a little over 14000 bbls, almost 14,500 bbls a day in just crude oil, which is a primary revenue source for us. As you go across the page, outside of things that are outside of our control, like realized oil prices, they were down 11%. In every control metric, we continue to improve those. We've made a lot of progress in terms of improving and reducing our capital costs. One of the big surprises for this quarter, even surprised ourselves, was the progress we made in terms of reducing our operating costs.
You'll see that we made incredible strides there in terms of reducing our lease operating costs 12%, but also our all-in cash operating costs, which also includes reductions in G&A that we were able to achieve. That also dropped 12%. All of that led to record adjusted free cash flow of almost $25 million. The majority or a lot of that we paid down debt. That was up over 300%. The things that are somewhat out of our control, although we continue to pay down debt that quarter, leverage ratio went up as a result of prices. We are working on that, and we're going to talk about those priorities as we go through this presentation. Okay, strength, flexibility, and resilience. The strategy that we're pursuing is a long-term strategy.
Everything we do is just laser-focused on maximizing free cash flow in everything we do, whether it's an investment in a new well or whether it's just operating the existing assets. We're always looking for ways to improve the profitability. This strategy is nothing really sexy or anything unusual. It's a proven strategy that was proven by others before us. It's one of those, you don't get rich quick, but nose against a grindstone, you can continue to generate long-term value for your shareholders. Since we've come on board, we came on board in the fourth quarter of 2020. We have increased our production by over 23% compounded annually. We've increased our proved reserves 88%. You've got to remember that 88% growth in reserves also included the effects of selling the non-core assets that we've had in our portfolio.
It also included overcoming the production that we have continued to grow. When we came on board, we were producing around 8,500 bbls, 8,600 bbls a day. As you know, now we're over 20,000 bbls a day. We've done quite a bit with this strategy. Maintaining our operational excellence, this is kind of the core of our culture. One of the key things that bore out in the second quarter of this year was the progress we were making associated with not only reducing the operating costs, reducing the capital costs associated with what the wells we're drilling, but we've done all of that safely in an environmentally responsible manner. If you look at our last sustainability report, you'll see that as a company, Ring Energy is at the top in terms of reducing emissions and doing the right thing for the right thing's sake.
All of this leads to meaningful cash flow. Like I said, last quarter we set a record for cash flow. The majority of our cash flow we applied towards paying down debt. We realized that we're on the higher end of our peer group associated with leverage metrics. We think that in a price environment like we're in today, that's the right thing to do. We're focusing on maintaining the balance sheet. What have we done? When we first came on board, our leverage ratio was right at 4x. We're more than double the size that we were at that time. Yet we've improved our leverage ratio by 50%. We've continued to pay down debt. If you look at what we did with the Founders CBP asset acquisition that we completed in the third quarter of 2023, we paid that acquisition off in essentially four quarters.
That was at a higher price environment, but that was also in an environment where we did not make any acquisitions the year after, but we still grew organically by drilling really economic wells, acquiring acreage, and increasing our reserve position. We delevered the company quite a bit. We paid off debt and Founders. The Lime Rock transaction we just completed in the first quarter, we're planning to do a very similar thing. We also have a very handsome hedge position that protects a large percentage, about 55% of our approved reserve forecast going forward. In 2025 and 2026, you can see the respective numbers. They're essentially $65 floors for 50% or 55% of our production. All of this comes together to create a strong and resilient company. We are more able to withstand oil prices, oil price shocks.
We are able to adjust our operational programs either upwards or downwards, depending on what the needs are for the company. Right now, the needs of the company, we believe, are focused on reducing our debt and improving our leverage ratio. Let's talk about some of the distinguishing aspects of Ring Energy. We have a chart here that shows our performance versus a group of peers. On the left-hand side, you can see our PDP-based decline. In our peer group of 11 companies or 10 companies, we have the second lowest decline rate. Decline rates are important because when you consider the decline rate of an oil company, before you can grow your production, you've got to replace your decline. That's an indication of the maintenance capital or the capital intensity necessary to maintain your production and maintain the liquidity with the banks.
We're constantly seeking ways to reduce our decline rates. We also have very, very long lives, reserve lives. When you look at our reserves, we happen to be number one in our peer group in terms of having the longest reserve life. The median there is 11.1 years, and here we are, we're at 18.7 years. That is also another indication of the long-term value, our ability to sustain volatile oil prices and a few other things. Down at the bottom of the page, we talked about this a little earlier. Higher operational ownership allows you to control your portfolio, but having higher net backs also improves the profitability of every barrel you produce. As a percentage of oil in your total product mix, as many of you know, Permian Basin companies are challenged to make money selling natural gas just due to the infrastructure limitations in the Permian Basin.
We are laser-focused on trying to increase and improve our oil percentage as a total mix. I believe that someday, especially when you look at some of the projects that are on the horizon, you're eventually going to get to a point where the infrastructure will allow the differentials between Henry Hub and Waha or El Paso to be a little bit more reasonable, but right now those differentials are quite large. Until that time occurs, we're still going to be focused on oil. All of these attributes lead to the most important one, in my opinion, and that is high operating margins. This is a chart, again, of 11 peers. On this chart, you can see that we're the third best in terms of having the highest operating margins. These high operating margins just allow you to weather oil price volatility.
Today, Ring Energy stands as a very strong company, and I'm going to show you a slide here shortly about, you know, at what price can we continue to thrive and grow. The bottom line is the heavy oil weighting, the low cash operating costs, generate strong returns, and we believe that this is the recipe for today and for the volatile environment that we're in. Let's talk about our guidance. Let's talk about what we have accomplished so far this year and what you can expect to see from us for the rest of the year. In the second quarter, we guided to 14,200 bbls of oil a day. We produced a little over 14,500 bbls a day, so we exceeded our midpoint of guidance, right about the midpoint between the midpoint and the higher end. We grew 2%.
Our total BOEs, we did not quite make our midpoint, and that was primarily due to infrastructure limitations taking our natural gas, and we were not able to sell all of the natural gas. As many of you know, we don't make a lot of money on that natural gas, and so it didn't affect the financials or the revenue. The other thing we've saved on our capital spending, now the capital guidance that we showed here of $18 million, that was after we revised our capital from our original program. We originally had a considerably higher amount of capital scheduled, and we dropped it 50%, and then we even saved on that in terms of reducing the cost. We came in 7% lower than the midpoint of our guidance, but that's a substantial change from what we were originally guiding from the beginning of the year.
Like I said a little earlier, the biggest surprise for the quarter was the low operating cost. Our operating cost came in 13% below the midpoint that we were describing. We even surprised ourselves, and that surprise basically came from the learnings and the application of when we integrated Lime Rock into our assets, we took a really strong, fresh look. How can we reduce the costs out here? We optimized our lease operator routes. We ended up reducing the total headcount necessary to operate not only the Lime Rock assets, but our own assets by 50%. That is a huge reduction. Typically, your labor is going to be at the top end of your ledger in terms of operating costs. We made great headways reducing the costs.
Now we're taking those same learnings that we gathered from the Lime Rock acquisition, and now we're taking those to other parts of the company. We believe that in the third quarter, fourth quarter, and going into 2026, you're going to see continued improving efficiency and metrics from Ring Energy. Bottom line, this year we're going to spend about $97 million in total capital, and that represents substantial reductions, as you can see in the little bar chart at the lower right-hand side of the chart. We're focused, like I said, our strategy focuses on maximizing free cash flow. On the left-hand side of this chart, you can see the progress we're making this year versus prior year. Our production on oil sales and also on a BOE basis, as you can see, we're going to be up about 2% over the prior year.
Yet we're going to reduce our capital spending by 36%. That capital pullback was an immediate reaction to Liberation Day oil prices, and we believe that it was the right thing then. Most people may remember that first week in April when Liberation Day came. The Ring Energy leadership team met virtually on the following Saturday morning, and we evaluated what was going on. We strongly believe that the price environment that we found ourselves in just for a few days had all the potential of staying around for a little while, so we didn't want to waste any time. We were moving in another more efficient rig the very next day, Sunday, and we decided we would postpone that, and we readjusted our capital spending program to what we have today, emphasizing debt reduction.
Here on the right-hand side of this chart, you can look at what we anticipate for the rest of the year. If the last half of the year averages anywhere from $55 a barrel of oil all the way up to $75 a barrel of oil, you can see what our adjusted free cash flow and our adjusted free cash flow yield should be this year. At $55, you can see that our adjusted free cash flow actually will be greater this year than it was last year, even though we were in a higher oil price environment. That's due to the strategy that we've been pursuing for the last four or five years, the ability to respond to the changing marketplace, adjusting the things that are within our control so that we can generate that kind of cash flow.
If we're fortunate to enjoy $65 or $70, as you can see, you can see how the numbers change. We also give you a forecast of what things look like in 2026. That is with the assumption that we'll maintain our capital spending to maintain our production, maintain the liquidity with the banks, no more than that. We're assuming $110 million. That's an uptick from the $97 million we're planning to spend this year. At $110 million, at $55 a barrel, you can see that we can generate over $30 million. If we are in a $55 price environment, we will cut our capital back down from that $110 million. We won't spend that much. Keeping everything all the same, and all you do is adjust the prices, you can see the anticipated cash flow you can expect from us next year.
The next thing I wanted to touch on with you is the progress we've made with Lime Rock. Lime Rock, very similar founders, very similar to the Stronghold. All of the acquisitions we've made so far with this management team have had profound impacts on the company. These are just a few of them. Since the addition of Lime Rock, our production per share has gone up 13%. Our all-in cash operating costs have come down 12%. Our adjusted free cash flow is up over 250%. This is as a result of not only the Lime Rock assets, but all the impact it has had on the company in terms of improving our efficiency, reducing our costs, and the laser focus we have in terms of maximizing our free cash flow. The next thing I want to touch on are the transactions that we've completed since 2019.
The first one was the Wishbone acquisition that the prior management team completed in 2019. We came on board in the fall of 2020. Since that time, we completed the Stronghold acquisition, the Founders acquisition, and then more recently the Lime Rock transaction. There at the bottom of the page, you can see the various different metrics and how that basically transformed the company. We believe that the Central Basin Platform, and we've been telling people this now for five years, that this was going to be the place to invest. There's a lot of resource left here. The application of these new modern technologies to conventional rocks, we demonstrated that that's a very valid strategy going forward. As many of you know, in the last two years, we've seen several sizable acquisitions or dispositions, if you want to call them, the transaction hit the marketplace.
Last year, Apache sold a very large package that Hilcorp picked up. Exxon Mobil also had a very nice handsome package out there that Hilcorp picked up. We'll talk about that a little bit later on. The world has woken up to the fact that the majority of the Midland Basin and the Delaware Basin are now locked up with the bigger guys. If you're looking for resources to develop, the Central Basin Platform is a great place. We discovered and found oil there a long time ago. The infrastructure is already there, even though some of the infrastructure does need to be upgraded here and there. By and large, it is a great place to operate. This is why we chose to focus here.
Again, emphasizing that same point, the Delaware Basin, the Midland Basin, you can see on the map that the majority of those basins are now locked up by the big publics. All of that red represents the publics. The green in those two basins represents what's left behind with the independents. Now, when you look at the Central Basin Platform, we use different color schemes. There you can see our acreage in yellow. You can see the orange acreage represents the independents, and the publics are in the blue. This is an underexplored area in the advent of the technologies that allowed for the development of the Midland and Delaware basins. We also believe that this area is ripe for the application of these technologies. We've proven that over the last five years.
If you look at the returns of our drilling programs, we have had very significant returns, very competitive with some of the best in both of those two basins. We have a proven track record of operating here in terms of reducing costs and applying these technologies. We just believe that this is another area that, and we're focused on growth in this area for all these very reasons. When we first came on board in the fall of 2020, I think we're the 18th largest producer in this area in Texas. On the chart at the bottom of the page, we're now the third largest operator in the Texas portion of the Central Basin Platform in the southern part of the shelf. We're proud of that growth. Now, we're talking a little bit about the acquisitions that occurred back in 2023 that Hilcorp made.
On the left-hand side here, you can see we use Apache as an example. The Apache package, Hilcorp paid $950 million. More recently, Mach Energy picked up some assets in the Central Basin Platform for $500 million. If you take those two trading metrics and convert that to where we should be, even though our stock price is better than $0.76 when this slide was put together, we're close to $0.95 now. We should be trading at about $2.51. The rest of the industry has already recognized the value of these assets in the Central Basin Platform in the southern part of the shelf. How long is it going to be before the marketplace recognizes that value?
Ring Energy is unique in some regards with respect to our stock price performance, and I'm not going to get into all those details, but we really do believe that we should be trading north of $2.40, $2.50 a share. This is a clear example of what and why you can justify that. This kind of brings me to the end of the presentation. Ring Energy is focused in this area for all the right reasons. The costs for the wells are relatively inexpensive because of the better rock quality. It requires less intensive frac jobs, so the frac jobs themselves are less expensive.
The performance, though, when you look at the production per day from these new wells and the reserves and the shallower declines, the economics are very robust and they compare very handsomely to even the best of the best in both of the other two unconventional basins, the Delaware and the Midland. We've demonstrated that we can apply these technologies. We've demonstrated that we know how to operate here. We're a low-cost operator with high margins. We've been continuously refining the portfolio, selling the assets that don't meet our criteria so that we have a much more manageable and more focused portfolio that continues to deliver the best of the best in terms of returns. Up until post-Liberation Day, we have been pursuing a combined strategy of both growth and improving the balance sheet.
In the price environment, when we were in the $70 or $75 environment, we were able to grow and acquire and also strengthen the balance sheet. We took our balance sheet, like I said, from four times down to 1.5x and now here recently it crept back up to 2x . We were able to do that, improve the balance sheet while we were able to grow. We're more than double the size that we used to be. Now, in the current price environment, it's a lot more challenging to grow accretively and responsibly for our shareholders. Because prices are where they are, we believe the focus really needs to be on strengthening the balance sheet, and that's what we're doing. We believe that's the right thing for our shareholders.
We believe getting our leverage ratio down below one times is probably the right place for us. Once oil prices recover, and depending on when they recover, you're going to see there'll be an extended period of concentration on reducing our debt, but we are not losing sight of growth. The two primary things that stand in the way of Ring' s real growth are, like we said, the balance sheet, but also the size and scale. Many of you know that the companies in our peer group that are on the larger side of that size and scale trade at a better metric than we do. Those companies that have lower leverage ratios than we have trade at a slightly better metric than we do. That's the reason why we're focused on these things. Until oil prices recover, we'll be focused on leverage.
For any of you that have questions, I welcome you to join us in the breakout room afterwards. This brings me to the end of our presentation. Thank you very much.