CA - InPlay Oil: 8% Yield And Monthly Payments What's Not To Like?

2024-07-16 08:30:00 ET

Summary

• After multiple headwinds in Q1, InPlay Oil is on strong footing as those headwinds turn into tailwinds.
• The company has secured gas take away contracts to enable production on its best acreage in the Pembina and is upgrading its older wells to improve productivity.
• The 8% dividend pays out monthly and has an adequate margin of safety in the current oil environment.
• InPlay trades at a 3x EV to EBITDA multiple, which is extremely cheap.

Thesis

After a strong recovery in crude prices during Q2, I decided to do a checkup on my previous coverage of InPlay Oil ( IPOOF ) ( IPO:CA ).

The company faced extreme weather challenges and a heavy CAPEX weighted quarter that resulted in slightly negative FCF in Q1. However, with production issues resolved and new wells coming online should place the company on solid financial footing to continue to pay out its monthly dividend, which now yields roughly 8%....

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