IPOOF - InPlay Oil (IPOOF)(IPO:CA) - New 2022 Guidance Highlights Value of Stock Price Target Raised

InPlay management gave updated end-of-the-year and initial 2022 production and cash flow guidance. Guidance was above our expectations, reflecting the strong performance of recent wells drilled in the Pembina Cardium. Production guidance for 2021 at the high end of the previous range of 5,500-5,750 boe/d is above our model assumptions of 5,613 boe/d. Initial guidance for 2022 is even more impressive at 6,300-6,550 boe/d versus our assumptions of 5,894 boe/d. The company has increased its capital budget and clearly expects favorable drilling results at Pembina to continue.Favorable production means higher cash flow. Management estimates that based on current energy prices, it will generate Adjusted Funds Flow of C$71.5-$74.5 million in 2022. This is significantly above our estimate of C$47.3 million and is roughly equal to the current market capitalization of the company on the Canadian exchange. Estimated free cash flow of C$38-$40 million will allow the company to essentially eliminate the debt on its line of credit and reduce overall debt to around $25 million.We are raising 2022 estimates and our price target. We are raising our 2022 production to 6,455, near the middle of management guidance. We are also raising our WTI oil price assumption to $60/bbl from $55/bbl to better reflect current conditions albeit still slightly below management assumptions. The result of higher production and energy prices increases our 2022 Adjusted Funds Flow to C$63 million from C$47 million. Our 2022 EPS estimate rises to C$0.40 from C$0.22. Our price target rises to US$2.50 from US$2.00 which equates to a price target of approximately C$3.25 for the shares on the Canadian exchange. Read More >>