IPOOF - InPlay Oil (IPOOF)(IPO:CA) - Operations Hitting On All Cylinders Price Target Raised
InPlay reported 2021-3Q results that surpassed almost every expectation. Production volumes of 6,011 BOE/day (up 61% yoy) beat our 5,932 BOE/day estimate. Realized oil prices of C$75.82/bbl and gas prices of C$3.89/mcf topped our C$73.14/bbl and C$3.18/mcf estimates. Higher prices resulted in strong cash flow results because several lower-priced oil and gas hedges rolled off after the second quarter. Adjusted fund flow of $15.6 million (up 680%) surpassed our $13.2 million est. Adjusted free fund flow (which subtracts off capital expenditures) was $5.1 million versus $1.6 million, in line with our estimate even as the company expanded its drilling program. EPS was $0.12 versus $(0.04) ahead of our $0.09 est. due to strong operating results.Prairie Storm acquisition looks like a winner. On September 28th, InPlay announced the acquisition of Prairie Storm for C$40.5 million to be paid with 8.3 million common shares and cash. The acquisition expands InPlay's Cardium play and is immediately accretive to earnings and cash flow at current energy prices. The acquisition brings InPlay an immediate production and cash flow boost as well as a large land position to support future drilling plans. Management raised production and cash flow projections significantly higher to reflect the acquisition. We are raising our production, pricing, cash flow generation, capital expenditures and share count and debt position to account for the acquisition and management's guidance. We are raising our price target on the shares of IPOOF to $3.00 per share from $2.50 per share. This is the third increase in our price target this year and comes in response to continued strength in energy prices, drilling and operating results, and a recent acquisition that we believe will be immediately accretive to earnings and cash flow. We would note that management expects, and our models confirm, that the company could generate close to C$110 in adjusted free cash flow in 2022 which would equal roughly 67% of the company's market capitalization. Read More >>