Ticker Symbol: IPO-T
INPLAY OIL
FINANCIAL HIGHLIGHTS
IPO Q4/22 RESULTS & ANALYSIS
InPlay survived the troubled times of the pandemic and has been astute on the acquisition front which lifted production in its core Cadium area materially at very attractive terms during the sector’s duress. InPlay’s production in Q4/22 rose 44% to 9,623 boe/d from 6,687 boe/d in Q4/21 due to the timely acquisition. Adjusted funds flow in Q4/22 rose to $30.3M or $0.35 per share versus $17.1M or $0.23 in Q4/21. For 2022-year production was 9,105 boe/d up 58% from 5,768 boe/d in 2021. Funds flow for 2022 was $131M ($1.51 per share) versus $47M ($0.67 per share) in 2021. Capex was $78M. Net debt fell by $47M to $33M at the end of 2022. It has a large upside potential from the Duvernay oil play, but this would be a 2024 potential due to the high well costs. Under our SER Quality Scoring system, we rate IPO as a ‘B’, a Survivor. For 2023 we see funds flow of $108M ($1.24 per share on average volumes of 10,000 boe/d. Capex should come in at $75M providing free funds flow to pay down more of the debt. Book value at the end of Q4/22 was $3.14 per share and our 2022 year-end NAV was $6.08 per share.
Balance of Evidence
POSITIVES
- InPlay initiated a dividend of $0.015 monthly or $0.18 annually which provides a yield of 7.0%.
- The CEO, Doug Bartole, is a material shareholder with 532K shares. Employees and Directors own 6.5% of the shares.
- IPO plans a large program (15-16 wells) of extended reach horizontal wells (ERH) Cardium wells in 2023.
ISSUES OF CONCERN
- We would like to see IPO add a material and active NCIB program to their shareholder return program.
Corporate Overview
Source: IPO March 2023 Investor Presentation
Focused Asset Base
Source: IPO March 2023 Investor Presentation
Net Asset Value
Share 2022 Reserve Report
Source: Corporate Reports & SER Forecasts
InPlay Oil – Weekly
Source: stockcharts March 23, 2023
Valuation Comparison
Source: Corporate Reports & SER Forecasts
Conclusion: BUY
- InPlay has transformed itself over the last year with timely acquisitions and a larger footprint in the Cardium play. With the recovery in production, and cash flow this year, we see the stock attractive again for Entrepreneurial investors. The stock trades below book value of $3.14 per share and below our NAV $6.08 per share. We expect to add IPO to our Action BUY List shortly. Their new dividend provides a very attractive current yield of 7.0%. We plan to add IPO to our buy list shortly.