InPlay Oil (IPOOF) Update - Feb 13

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dan_s
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Joined: Fri Apr 23, 2010 8:22 am

InPlay Oil (IPOOF) Update - Feb 13

Post by dan_s »

I met with Doug Bartole, CEO of Inplay on Feb 12 in Houston. He made a presentation to ~30 people, many of them are shareholders.

I have updated my forecast/valuation model based on his presentation material and it has been posted to the EPG website.

InPlay Oil is in our Small-Cap Growth Portfolio and I have been following it for over five year. Plus, I've known Doug and Scott Koyich (InPlay's and Hemisphere's Investor Relations person) for over a decade. InPlay has a rock solid management team that has consistently increased production and proven reserves year-after-year.

We published a profile on InPlay Oil on December 9th. We will be updating it after they release Q4 results in March.

An upstream company that is funding high single digit annual production growth entirely with cash flow from operatins with this much running room (over ten years of Tier One drilling locations) should be trading for at least 5X operating cash flow per share.

> Today IPO is trading for slightly more than 1X operating cash flow per share based on my forecast model ($0.54Cdn). See row 49 of the forecast model.

> My updated valuation of IPO is $2.18Cdn/share and $1.63US/share for (IPOOF).

> First Call's valuation is $1.35Cdn per share.

> The company's net asset value based on just the PV10 value of its Proved Developed Producing reserves ("PDP") as of December 31, 2018 is $2.17Cdn per share.

IPO.TO is trading for $0.54Cdn/share today, so it has SIGNIFICANT UPSIDE for us; especially if oil pushes back over $60/bbl for WTI. Note that there is zero in my valuation for the HUGE upside that InPlay has in the Duvernay Shale Play where they have over 100 Tier One horizontal drilling locations. InPlay's 30,960 acre in the Huxley Area has an estimated value of close to $50Cdn million ($0.72Cdn per share).
Dan Steffens
Energy Prospectus Group
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