ROK Resources (ROK) Updated Valuation - April 17

Post Reply
dan_s
Posts: 34470
Joined: Fri Apr 23, 2010 8:22 am

ROK Resources (ROK) Updated Valuation - April 17

Post by dan_s »

This morning I received additional information from ROK Resources and a recently updated profile on the company from a respected Canadian energy sector analyst, Kirk Wilson at Beason Securities whose price target is $0.90Cdn.
Updated details on the Company's hedges and interest expense (they should be virtually debt free in 2 months) had the most impact on my valuation. I have posted my forecast/valuation model to the EPG website.

Keys to my increased valuation of $1.00Cdn are:
> A solid management team with a track record of success.
> A strong balance sheet that should be virtually debt free by the end of the 2nd quarter.
> Since closing a transformational acquisition on March 7, 2022 (FCL) they have increased production from ~3,000 Boepd to 4th quarter 2022 production of 3,549. Current production is ~3,750 Boepd with this year’s drilling program expected to push production up to 4,500 Boepd by year-end (~60% crude oil).
> This year’s D&C program is expected to be fully funded by operating cash flow AND generate ~$6Cdn million of FREE CASH FLOW.
> ROK Resources has lots of running room (112 booked drilling locations per the McDaniel & Associates year-end reserve report) in two of the best oil plays in Canada. BY SPENDING JUST 60% OF OPERATING CASH FLOW, ROK SHOULD DELIVER OVER 30% ANNUAL PRODUCTION GROWTH.

If you live in the Houston area, I highly recommend that you attend tomorrow's luncheon. ROK has the potential to be the next Canadian Junior to generate a triple digit percentage return for us. It has a lot of "Running Room".

Your attendance at our luncheons is important to the success of our in-person networking events.
Dan Steffens
Energy Prospectus Group
Cliff_N
Posts: 318
Joined: Sun Jul 24, 2022 4:09 pm
Location: Seabrook, TX
Contact:

Re: ROK Resources (ROK) Updated Valuation - April 17

Post by Cliff_N »

Dan, I follow this on Yahoo Finance under:

ROK Resources Inc. (PTRDF)
Other OTC - Other OTC Delayed Price. Currency in USD
Would be great to see this pump to .75 cents USD.
Today:
0.3000+0.0100 (+3.45%)
At close: 02:45PM EDT
dan_s
Posts: 34470
Joined: Fri Apr 23, 2010 8:22 am

Re: ROK Resources (ROK) Updated Valuation - April 17

Post by dan_s »

Cam Taylor's team has done a great job building shareholder value. This year's drilling program starts in July and it will be the beginning of strong production growth. By June ROK should be virtually debt-free.
Dan Steffens
Energy Prospectus Group
dan_s
Posts: 34470
Joined: Fri Apr 23, 2010 8:22 am

Re: ROK Resources (ROK) Updated Valuation - April 17

Post by dan_s »

I was very impressed by ROK's presentation at our luncheon today. The company has more upside than my $1.00Cdn valuation. We will be publishing a profile on ROK in a few days.
Dan Steffens
Energy Prospectus Group
dan_s
Posts: 34470
Joined: Fri Apr 23, 2010 8:22 am

Re: ROK Resources (ROK) Updated Valuation - April 17

Post by dan_s »

I made some minor changes to my ROK forecast/valuation model after what I heard at the luncheon on Tuesday. I posted it to the EPG website.
> Q1 production will be higher than I previously modeled.
> My confidence in the realized oil, NGL and natural gas prices (net of cash settlements on their hedges) used in my forecast model increased based on what they said during Q&A and our discussion after the luncheon.
> My production forecasts for 2024 and 2025 are probably too low, but for now I am leaving them at 5,500 Boepd and 7,500 Boepd. < With an accelerated drilling program (~30 new wells in 2025) ROK's production could go to ~10,000 Boepd within two year.
> My 2025 forecast assumes that all outstanding warrants and options will be exercised early in 2025. < As discussed at the luncheon, this will add close to $35Cdn million to ROK's cash and they will use the money to accelerate production growth (a VERY Good thing!)

ROK has a lot of "Running Room" in two of North America's best oil & gas fields. The per-well economics in SE Sask are INCREDIBLE. Kaybob is "gassy", so this year's drilling program will focus on SE Sask (10-12 new wells).

PS: Their Lithium project has significant upside that is not included in my valuation. We should get some clarification on it late this summer.
Dan Steffens
Energy Prospectus Group
Post Reply