InPlay Oil (IPOOF) Updated Valuation - May 11

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

InPlay Oil (IPOOF) Updated Valuation - May 11

Post by dan_s »

I have updated my forecast/valuation model for InPlay for their outstanding Q1 results. They have accelerated their 2022 drilling program, which should push full year production to the high end of their guidance range of 8,900 to 9,400 Boe per day for the year.
IPO.TO is currently trading for $3.73Cdn and IPOOF is trading for $2.87US.
My current valuations are $8.25Cdn and $6.60US < Based on InPlay's 12/31/2021 3rd party reserve report, the PV10 Net Asset Value of just their proved reserves (based on much lower oil, gas & NGL prices than we have today) was $7.41Cdn per share.

Why am I so bullish?
> InPlay's Q1 results beat my forecast and production growth is ahead of schedule. Production increased from 6,687 Boepd in Q4 to 8,221 Boepd in Q1.
> The Company's realized commodity prices (net of cash settlements on their hedges) were much better than I forecast, with much higher gas and NGL prices.
> North American natural gas prices are getting pulled higher by depleted gas storage in Canada and the U.S. and by the increase in demand for LNG.
> I believe the "Structural Change" in the North American gas and NGL markets will keep these commodity prices high for at least two years.
> The well results reported by InPlay for Q1 were OUTSTANDING. Their new horizontal wells in the Cardium are paying out within 3 months after completion AND THEY HAVE OVER 100 MORE DRILLING LOCATIONS.
> InPlay has a clear path to production over 10,000 Boepd by year-end and over 12,000 Boepd by the end of 2023.

If WTI stays over $100/bbl, InPlay's P1 reserves should have a PV10 Net Asset Value over $10Cdn/share at year-end 2022.

First Call's current price target for IPO.TO is $5.84Cdn and it will go higher when analysts update their models.
Dan Steffens
Energy Prospectus Group
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