Small-Cap Growth Portfolio "Quick Takes" - Jan 25

[dan_s]

These are my quick takes on each company in our Small-Cap Growth Portfolio. I discussed them on today's webinar.
I will be updating all of their forecast models next week.

Granite Ridge Resources
• Non-op company similar to Northern Oil & Gas
• Pays a nice dividend ~8% yield
• Production down a bit in Q4, but should exceed my forecast of 24,500 Boepd
• Only 1 analyst covers it (BofA). Price target is $9.00, which compares to my valuation of $9.25.

InPlay Oil
• Q4 production should be near my forecast of 9,850 Boepd, big increase over Q3
• Q1 production likely impacted by the weather.
• Monthly dividends are nice. ~8% annual yield.

Kolibri
• Q4 production up ~500 Boepd over Q3, but much lower than expected due to timing of well completions.
• Q1 production should be over 4,000 Boepd and full-year over 5,000 Boepd in 2024; compared to 2,900 Boepd in 2023.
• Should put out an operations update soon. Lots of “Running Room” in Central Oklahoma.

Riley Exploration Permian
• Production up more than 50% YOY in 2023, but expected to be down from Q3 to Q4
• ~20% YOY production growth expected in 2024.
• Free cash flow paid off a chunk of debt ($30 million). Balance sheet in good shape.
• 6.5% dividend yield easily covered by free cash flow.

Ring Energy
• Production should be more than 1,500 Boepd (over 8%) Quarter-over-Quarter in Q4.
• Steady production growth fully funded by operating cash flow. Free cash flow positive for 17 straight quarters.
• My valuation is just 4X operating CFPS, low for a company with production growth locked in.
> Ring needs to start paying dividends.

ROK Resources
• Q4 production should be slightly higher than my forecast
• Operations update next week
• Year end reserve report and 2024 budget released in February. Very strong balance sheet and lots of "Running Room" in Canada.

Solaris Oilfield Infrastructure
• Debt free with nice dividend. 6.3% yield and I expect them to increase dividends in 2024.
• Highly respected oilfield services company
• Management needs to get out and tell their story. Almost zero analyst coverage.

Surge Energy
• Q4 production beat guidance
• No additional news until March
• Monthly dividends with 7.5% annual yield

Talos Energy
• Pure play on the Gulf of Mexico
• The QuarterNorth Energy Acquisition will add 30,000 Boepd by end of Q1 and lots of “Running Room”
• Might be moved to the Sweet 16 with production over 100,000 Boepd in Q2 2024.
• All 5 analysts that cover it rate it a BUY with price targets of $17 to $24 (average PT is $20.20). My valuation is $22/share.