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.
ROK Resources (ROK) Updated Valuation - April 17
ROK Resources (ROK) Updated Valuation - April 17
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group
Re: ROK Resources (ROK) Updated Valuation - April 17
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
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
Re: ROK Resources (ROK) Updated Valuation - April 17
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
Energy Prospectus Group
Re: ROK Resources (ROK) Updated Valuation - April 17
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
Energy Prospectus Group
Re: ROK Resources (ROK) Updated Valuation - April 17
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.
> 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
Energy Prospectus Group