InPlay Oil (IPOOF) Price Target Raised - Aug 23

[dan_s]

InPlay Oil (IPO.TO) raised to $6.90Cdn per share by First Call.

My current valuation is $9.56Cdn for IPO.TO and $7.65US for IPOOF

InPlay has strong production growth (44% YOY in 2021 and on pace for 61% YOY in 2022).
More important is that they have a clear path to 12,000 Boepd in 2023.

[Fraser921]

Does HEMNF or IPOOF exposed to AECO. AECO sellers are getting screwed big time.

[dan_s]

HMENF is a pure play on Canadian heavy oil. Almost zero revenues from natural gas because they use it to power the pumps in their Atlee Buffalo Field.

IPOOF's production mix in Q2 was
> 42.7% light oil with a realized price of $129.61Cdn/bbl (compared to $58.25Cdn in Q2 2021)
> 42.6% natural gas with a realized price of $6.10Cdn/mcf (compared to $3.27Cdn in Q2 2021) < the best ngas price they've had in history of the company.
> 14.7% NGLs with a realized price of 59.73Cdn/mcf (compared to $30.27Cdn in Q2 2021)
Total revenues were $67.7 million in Q2 2022 compared to $20.7 million in Q2 2021

Both companies are generating lots of free cash flow and should be virtually debt free by year-end

[CreativeEquity]

not clear what markets Inplay has access to but AECO price is currently negative. They have to pay the buyer to take their production, and their slide deck is using a 6.00 price assumption.

[CreativeEquity]

They have only about 30% of aeco hedged in q3 and drops closer to 20% in q4 in giving them lots of exposure to current collapse in price.

[CreativeEquity]

This probably at least partially explains the low share price.

[CreativeEquity]

Natural gas production in Western Canada has been climbing this year, averaging about 17.4 billion cubic feet of production per day this month, up one bcf per day from a year earlier, noted Martin King, a senior analyst at RBN Energy in Calgary.

That increase is putting pressure on the existing pipeline network.

“The end result is more supply than the market can handle, and you’re seeing prices come down,” he said

https://calgaryherald.com/opinion/colum ... l-discount