ROK Resources (ROKRF) Q4 Results - Apr 18
Posted: Thu Apr 18, 2024 2:02 pm
ROK announced Q4 results this morning, but I need more details before I can update my forecast/valuation model.
Best news is that Q4 funds flow from operations beat my forecast and their production guidance for 1H 2024 is higher than my forecast.
Looking forward:
REGINA, SK / ACCESSWIRE / April 18, 2024 / ROK Resources Inc. ("ROK" or the "Company") (TSXV:ROK)(OTCQB:ROKRF) announces revised first-half 2024 guidance, and has filed its Annual Financial Results and Management Discussion & Analysis for the year ended December 31, 2023.
First-Half 2024 Revised Guidance < They are going to accelerate Phase One of this year's drilling program, which should add a lot of production by mid-Q3.
With the recent stability of WTI pricing, the Company anticipates commencing its drilling program after spring break-up in late Q2 2024. Key initiatives for 2024 include reducing corporate finding and development costs and expanding core operating areas in Southeast Saskatchewan. The six well program, which will target Frobisher light oil prospects, will begin with prospects offsetting the best oil well in Saskatchewan in December 2023. To support these endeavors, the first-half 2024 capital budget has been revised from $4.0 - $4.5 million to $10.0 - 10.5 million. This acceleration of development is contingent on various factors, including favorable weather and road conditions following spring break-up. < Operating cash flow during 1H 2024 should be $16 to $18 Cdn million; more than enough to fund this phase of the 2024 capex program.
The Company intends to provide second-half 2024 guidance in late Q2 2024.
Highlights of Revised First-Half 2024 Guidance < ROK's revenues are heavily weight to oil, so the recent improvement in Western Canada's oil prices is a big boost for this small-cap.
Stability in WTI: Company will increase its capital budget in first-half 2024 to $10.0 - $10.5 million, with an expected benefit to Net Operating income through second-half 2024 as new unhedged production comes on-stream. The Company expects to average ~4,000 boepd in first-half 2024 (61% liquids);
Net Debt: Estimated $16.0 - $16.5 million in Adjusted Net Debt at the end of first-half 2024;
Expedited Drill Program: Addition of 6 gross (5.4 net) Frobisher wells in late Q2, weather permitting; and < Frobisher zone is oil prone. They are not going to drill any new wells at Kaybob, which is primarily a natural gas play. These first six gross wells with D&C costs of approximately $1.3Cdn million each, should push ROK's production up to 4,600 Boepd by end of Q3. My guess is that if oil prices remain elevated, they will add 8 or 10 more wells in late Q3, so an exit rate of more than 5,500 Boepd (59% oil, 11% NGLs and 30% natural gas) is possible this year.I like ROK's strategy of completing each year's capex program before winter weather sets in. Much cheaper that way.
Efficient Use of Capital: $1.0 million allocated to reactivations and recompletions, expected to yield average capital efficiencies of $5,000 to $10,000 per boepd.
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Bottomline: ROK has a lot of "Running Room" in SE Saskatchewan; over 100 horizontal Frobisher drilling locations. At current oil & gas prices, ROK estimates that their Frobisher wells will payout in 8 months after being completed to sales. Based on my preliminary 2024 forecast, ROK's operating cash flow should be close to $45Cdn million this year.
Best news is that Q4 funds flow from operations beat my forecast and their production guidance for 1H 2024 is higher than my forecast.
Looking forward:
REGINA, SK / ACCESSWIRE / April 18, 2024 / ROK Resources Inc. ("ROK" or the "Company") (TSXV:ROK)(OTCQB:ROKRF) announces revised first-half 2024 guidance, and has filed its Annual Financial Results and Management Discussion & Analysis for the year ended December 31, 2023.
First-Half 2024 Revised Guidance < They are going to accelerate Phase One of this year's drilling program, which should add a lot of production by mid-Q3.
With the recent stability of WTI pricing, the Company anticipates commencing its drilling program after spring break-up in late Q2 2024. Key initiatives for 2024 include reducing corporate finding and development costs and expanding core operating areas in Southeast Saskatchewan. The six well program, which will target Frobisher light oil prospects, will begin with prospects offsetting the best oil well in Saskatchewan in December 2023. To support these endeavors, the first-half 2024 capital budget has been revised from $4.0 - $4.5 million to $10.0 - 10.5 million. This acceleration of development is contingent on various factors, including favorable weather and road conditions following spring break-up. < Operating cash flow during 1H 2024 should be $16 to $18 Cdn million; more than enough to fund this phase of the 2024 capex program.
The Company intends to provide second-half 2024 guidance in late Q2 2024.
Highlights of Revised First-Half 2024 Guidance < ROK's revenues are heavily weight to oil, so the recent improvement in Western Canada's oil prices is a big boost for this small-cap.
Stability in WTI: Company will increase its capital budget in first-half 2024 to $10.0 - $10.5 million, with an expected benefit to Net Operating income through second-half 2024 as new unhedged production comes on-stream. The Company expects to average ~4,000 boepd in first-half 2024 (61% liquids);
Net Debt: Estimated $16.0 - $16.5 million in Adjusted Net Debt at the end of first-half 2024;
Expedited Drill Program: Addition of 6 gross (5.4 net) Frobisher wells in late Q2, weather permitting; and < Frobisher zone is oil prone. They are not going to drill any new wells at Kaybob, which is primarily a natural gas play. These first six gross wells with D&C costs of approximately $1.3Cdn million each, should push ROK's production up to 4,600 Boepd by end of Q3. My guess is that if oil prices remain elevated, they will add 8 or 10 more wells in late Q3, so an exit rate of more than 5,500 Boepd (59% oil, 11% NGLs and 30% natural gas) is possible this year.I like ROK's strategy of completing each year's capex program before winter weather sets in. Much cheaper that way.
Efficient Use of Capital: $1.0 million allocated to reactivations and recompletions, expected to yield average capital efficiencies of $5,000 to $10,000 per boepd.
--------------------------------
Bottomline: ROK has a lot of "Running Room" in SE Saskatchewan; over 100 horizontal Frobisher drilling locations. At current oil & gas prices, ROK estimates that their Frobisher wells will payout in 8 months after being completed to sales. Based on my preliminary 2024 forecast, ROK's operating cash flow should be close to $45Cdn million this year.