InPlay Oil (IPO.TO and IPOOD) Valuation Update - May 9

[dan_s]

At the time of this post IPO.TO was trading at $7.85Cdn. I expect InPlay to continue paying dividends of $0.09Cdn per month, so annualized dividend yield is 13.75%.

I have updated my forecast/valuation model for InPlay's Q1 2025 results and updated guidance.
They have lowered their drilling program, so I expect them to maintain production at approximately 19,000 Boepd after Q1. InPlay's plan is to focus on free cash flow generation this year until there is more clarity on where oil and gas prices are heading. I do expect oil prices to rebound after the FEAR of the Tariff War fades, which has started and will accelerate as more fair trade deals are announced. When the Republicans finally pass the tax bill, I expect the S&P 500 Index to gain over 1,000 points.

My updated valuation of IPO.TO is $14.00Cdn, which compares to First Call's price target of $13.00Cdn.
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There is some confusion over how many shares of common stock InPlay has outstanding after the transformative Pembina Area Acquisition that closed on April 14 and the 1 for 6 conversion. Below is a note from InPlay's recent financial statements. InPlay also has a Stock Buyback program underway.

The Company’s common shares are listed on the Toronto Stock Exchange under the symbol IPO.

As of May 7, 2025, there were 27,939,402 common shares outstanding, which excludes 12,802 common shares
held in trust for the potential future settlement of awards issued under the Company’s Restricted and
Performance Award Incentive Plan, and an additional 713,780 stock options that, subject to vesting, are
convertible into, or exercisable or exchangeable for, an equivalent number of common shares of the Company.
In addition, there were 286,993 RAs and 258,147 PAs outstanding.

The Company periodically provide funds to an independent trustee to acquire common shares in the open
market, which are held in trust for the potential future settlement of Restricted and Performance award values.
The common shares held in trust are netted out of share capital, including the cumulative purchase cost, until
they are distributed for future settlements. For the three months ended March 31, 2025, the independent trustee
purchased 8,123 common shares for a total cost of $0.1 million and as at March 31, 2025, the independent
trustee held 38,701 common shares in trust.

Monthly Dividends are expected to stay at $0.09Cdn per share ($1.08Cdn per year).

The Company’s Board of Directors approved the implementation of a monthly base cash dividend of $0.09
per share commencing in November 2022 which resulted in the payment of $4.1 million in dividends during
the three months ended March 31, 2025 (March 31, 2024 - $4.1 million).

Subsequent to March 31, 2025, the Board of Directors approved and declared monthly cash dividends of $0.09
per share, designated as eligible dividends, payable to shareholders of record on April 15, 2025 and May 15,
2025. The dividend payment date for these dividends is April 30, 2025 and May 30, 2025, respectively.

[dan_s]

Fresh Analysts' reports on IPO.TO

Canaccord Genuity Research 5-8-2025
Valuation and recommendation. We reiterate our BUY rating on IPO but have lowered our price target to $13.00Cdn (from $15.00), reflecting a 3.9x 2025E EV/DACF multiple. IPO currently trades at 2.8x 2025E EV/DACF, compared to the peer group average of 2.9x.

Noble Capital Research 5-9-2025
Rating is Outperform with price target of $15.00Cdn
In our view, the shares offer meaningful capital appreciation potential following InPlay’s transformational acquisition of the Pembina assets, which significantly expanded its production base and drilling inventory. The company’s strategy of disciplined capital allocation and high-netback oil-weighted production positions it to deliver value. As integration progresses and post-acquisition production ramps, we expect margins and free funds flow to improve.

If you'd like to read the full reports send me an email and I will forward them to you: dmsteffens@comcast.net

MY TAKE: IPO.TO and IPOOD are "Screaming Buys" for high dividend yield + capital appreciation