InPlay Oil (IPOOF) Update - April 19

[dan_s]

Doug Bartole made a good presentation at our luncheon on April 19.

My current valuation of IPO.TO is $7.67Cdn ($5.75US for IPOOF), but this company has a lot more upside for us. Doug told me that if WTI averages $80/bbl the Company's realized oil price should be over $100Cdn/bbl, which is higher than what I have used in my model.

InPlay now has a pristine balance sheet with Net Debt / EBITDA ratio of just 0.2X.
They can maintain their monthly dividend of $0.015/share ($0.18/year) as long as WTI averages over $55US/bbl.
This year's drilling program will complete 17-18 horizonal Cardium wells that should payout in 6 to 8 months at current oil prices.
Free cash flow should be $20 to $25 million this year.
Annual production growth of 10% should be fully funded by operating cash flow with enough free cash flow to pay dividends.
Projected PV10 Net Asset Value at December 31, 2023 should be over $9.00Cdn/share based on just proved reserves (P1).

They are currently looking at several possible accretive acquisitions.

This year's drilling program will focus on generating more oil production, which is likely to increase my forecast and stock valuation. None of their oil is currently hedged.