ROK Resources (ROKRF) Valuation Update - Jan 31

[dan_s]

ROK Resources is a Canadian Junior that is a recent addition to our Small-Cap Growth Portfolio.

This morning the stock is trading for $0.195US per share. My current valuation is $0.70US per share.

ROK closed three "Transformative" transactions (2 asset purchases and 1 sale that closed on 4-3-2023) that are key to my valuation. Cash proceeds of $47Cdn million from the non-core asset sale was used to pay off all of their Senior Debt in May 2023.

This Company now has a very strong balance sheet and a lot of running room. Recent well results have been very good and they have more than enough operating cash flow to fund production growth of ~3,300 Boepd in Q2 2023 to over 5,000 Boepd in 2H 2024. Their 2023 exit rate should exceed 4,200 Boepd.

ROK's realized oil prices during the first nine months of 2023, including cash settlements on their hedges, exceeded $100Cdn/bbl each quarter.

ROK's production mix is approximately 55% light oil, 12% NGLs and 33% natural gas. Rising NGL prices should soften the impact of crappy natural gas prices in 2024.

My updated forecast model for ROK has been posted to the EPG website.