InPlay's CEO, Doug Bartole presented the Company's Pro Forma Outlook for 2022 at our Houston luncheon today. It is based on $69.75/bbl WTI oil price which should translate to over $81Cdn/bbl net to InPlay in 2022. A summary of the 2022 forecast is on slide 11 of their October presentation that can be downloaded from the InPlay website.
https://www.inplayoil.com/
It is "Pro Forma" for the closing of the previously announced acquisition from Prairie Storm Resources that is now expected to close in late November, 2021. InPlay now has all of the financing in place to close the deal. At today's oil price, the acquisition is immediately accretive to all per-share metrics.
Bottomline: IPOOF has the potential to me more than a triple for us within six months.
My 2022 forecast is based on the midpoint of their production guidance of 9,150 Boepd. < I think there is potential for production over 10,000 Boepd in 2022 and over 20,000 Boepd in 2025.
2022 Operating Cash Flow is estimated to be $106.5 to $111.5Cdn million < Compares to my forecast of $103.7Cdn million.
2022 free cash flow of $55 to $59Cdn compares to their year-end 2021 net debt of approximately $78Cdn million.
What impressed me the most was slide 10: With a WTI oil price of $70/bbl their 1.5 mile horizontal wells in Pembina and Willesden Green payout in less than six months based on their pre-drill type curve and recent wells have been producing way above the type curve and paying out in three months.
Take a look at slide 8 and you can see that InPlay has 153 low-risk/high-return horizontal drilling locations at Pembina and 188 at Willesden Green. < This is a lot of "running room" that deserves an even higher valuation.
IPOOF closed today at $1.39US. My current valuation is $3.25US and it will go to over $4.00US after I get Q3 results that come close to my forecast and the Prairie Storm acquisition closes in November.
InPlay Oil (IPOOF) Update - Oct 26
InPlay Oil (IPOOF) Update - Oct 26
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group
Re: InPlay Oil (IPOOF) Update - Oct 26
Hi Dan ... So I just spent the day modeling out In Play. I come up with numbers a little below management guidance based on higher cost estimates and also a fully diluted share count of like 93m post-acquisition.
But ...
My big question is: Why did they go (essentially) bankrupt in 2014-15? Their per-BOE cash margins were about the same then as they are now. From 2011-2016 they were between $22 and $32/BOE. Yet every year they lost money and book value went down -- almost always due to large non-op losses. For instance, they had a C$48m asset writedown in 2014 and a C$39m intangible writedown in 2015.
The financials are a train wreck every year from 2009 to 2015. Taking on more debt ... book value falling ... share count rising as they issue equity to bail themselves out.
It looks like they got sucked into the shale-play land-grab rush and overpaid for drilling acreage and then had to write them off when gas fell. Same thing as Comstock more or less.
How can we be sure the same dynamic is not playing out again? I don't SEE that in the numbers but ...
I guess what is different is that the book value is lower today: The assets are not MARKED at the enormous levels they were marked at in 2009-10. So there is not this potential kinetic implosion energy sitting there on the balance sheet. Tx ... mike
But ...
My big question is: Why did they go (essentially) bankrupt in 2014-15? Their per-BOE cash margins were about the same then as they are now. From 2011-2016 they were between $22 and $32/BOE. Yet every year they lost money and book value went down -- almost always due to large non-op losses. For instance, they had a C$48m asset writedown in 2014 and a C$39m intangible writedown in 2015.
The financials are a train wreck every year from 2009 to 2015. Taking on more debt ... book value falling ... share count rising as they issue equity to bail themselves out.
It looks like they got sucked into the shale-play land-grab rush and overpaid for drilling acreage and then had to write them off when gas fell. Same thing as Comstock more or less.
How can we be sure the same dynamic is not playing out again? I don't SEE that in the numbers but ...
I guess what is different is that the book value is lower today: The assets are not MARKED at the enormous levels they were marked at in 2009-10. So there is not this potential kinetic implosion energy sitting there on the balance sheet. Tx ... mike
Re: InPlay Oil (IPOOF) Update - Oct 26
InPlay is not a shale play and it is a much different company today. I think the old data you are looking at may be from the previous public company that they took over.
InPlay's year-end reserve report should support even a higher price than I am modeling.
Always focus on operating cash flow, not reported net income. Accounting rules make reported net income a worthless number.
I expect InPlay to announce Q3 results on November 11.
InPlay will be hosting a live webinar for us in December, after the recently announced acquisition closes. You can ask all your questions during the live event.
InPlay's year-end reserve report should support even a higher price than I am modeling.
Always focus on operating cash flow, not reported net income. Accounting rules make reported net income a worthless number.
I expect InPlay to announce Q3 results on November 11.
InPlay will be hosting a live webinar for us in December, after the recently announced acquisition closes. You can ask all your questions during the live event.
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group
Re: InPlay Oil (IPOOF) Update - Oct 26
Great ... thanks for the clarification. Yeah that's probably what happened. A lot of series sort of zero out around 2015. So it's almost like they bought it for the tax-loss carryforwards ... mc