ROK Resources (ROK.V and ROKRF) Price Targets - Jan 7

[dan_s]

ROK.V closed at $0.185Cdn today and ROKRF closed at $0.1325 today.

First Call's price target today is $0.45Cdn

Here is what other energy sector analysts are saying:
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Christopher True at Eight Capital Research. His price target is $0.50Cdn

We view ROK's Q3 2024 results and update as mixed with production in-line with expectations, capex lower than expected, and CFPS below Consensus estimates. While production was lower than our expectation, the company reported better-than-expected oil/liquids volumes which drove cash flow of $5.5 million versus our $5.0 million estimate. Finally, ROK plans to release its 2025 budget early in January 2025.

Highlights from the release:

> ROK reported CFPS of $0.02/share which is in-line with our $0.02/share estimate and below the Consensus estimate of $0.03/sh.

> Production of 3.8 MBOE/d was in-line with the Consensus estimate of 3.9 MBOE/d and below our 4.1 MBOE/d estimate. Production below our estimate was due to less-than-expected gas volumes, which had an immaterial impact on cash flows.

> The company spent $3.0 million on capital expenditures during the quarter, which is below our $8.3 million estimate and below the consensus estimate of $8.0 million. During the quarter, ROK drilled 2 gross (1.5 net) wells in Saskatchewan with one hitting an IP30 of 240 BOE/d (85% liquids). The two wells drilled had no prior reserves value associated and are expected to set up the company with future drilling prospects in core areas of Saskatchewan.

Drilling outlook for the remainder of the year: In Q4/24 ROK will drill 3 gross (2.9 net) wells targeting the Frobisher and testing its first multilateral Midale well. ROK also plans to construct a multi-well facility which will lower operating costs and optimize existing wells.

We reiterate our BUY rating and $0.50 target price. Our target is based on a 50/50 weighting of 2.0x 2024E EV/DACF target multiple and 1x our risked estimated NAVPS. Risks to our price target include commodity prices, cost inflation, equipment, rig & crew availability, and production performance.
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Bill Newman at Research Capital. His price target is $0.55Cdn

ROK Resources Inc. (“ROK”) announced its Q3/24 financial and operational results, which were in line with our forecasts. The quarter was highlighted by the sale of a non-core gross overriding royalty interest for proceeds of $4.0mm. Coupled with limited capital expenditures, ROK reduced its net debt to $9.1 million, representing 0.4x our 2024 funds flow forecast. This improved financial flexibility positions the company to potentially accelerate growth in 2025. We maintain our BUY recommendation and have adjusted our target price to $0.55 (from $0.60), based on an EV/DACF multiple of 3.5x applied to our new 2025 DACF estimate.
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Adam Gill at Ventum Capital Markets. His price target is $0.35Cdn

ROK delivered Q3/24 results that were relatively in line with our expectations. Production for the quarter averaged 3,773 Boe/d (61% oil), right in line with our 3,790 Boe/d forecast but with a better oil weighting vs. our 59% expectation. While production volumes contracted ~4% q/q, driven by gas shut-ins, we note that oil volumes increased ~13% q/q (we were looking for an 8% increase in oil volumes). Funds flow came in at ~$6.2M (~$5.5M including ARO spending) / ~$0.03 (diluted), which is also in line with our $6.1M / $0.03/shr estimate.

Post-quarter, the Company divested $4M of non-core GORR interest, which management sees transacting at 5.5x 2025 expected cash flow and ~4x the $1M of PDP value. These proceeds will go towards debt repayments, with management now seeing YE net debt at $12.6M, down 24% from the prior forecast of $16.6M.

Overall, we see the quarter as a positive given the strong q/q oil growth, which was better than expected, and improvement in the balance sheet with the post-quarter GORR divestiture. We note that ROK has a solid balance sheet with D/CF below 1x this year and next, well positioning the Company for acquisitions in our view, which is something we would like to see for cost-saving synergies and building-up scale.

[dan_s]

This morning ROK.V is trading for $0.1850Cdn per share.

This is VERY IMPORTANT: 100% of the 113,140,877 warrants that ROK has outstanding will expire on March 4, 2025 because they have a strike price of $0.25Cdn.

When they expire, it should be a catalyst because the risk of dilution goes way down.

ROK.V also has 18,210,000 stock options that have strike prices of $0.25Cdn to $0.40Cdn per share. Since my stock valuation is currently $0.57Cdn per share, I am assuming that all of these options will be exercised by 2026.