April 24, 2022
InPlay Oil (IPOOF) is an oil producer based in Alberta, Canada.
Here is the company’s most recent investor presentation: https://www.inplayoil.com/sites/2/files/documents/inplay_march_presentation_web_0.pdf
For 2022, revenue will be about $300 million, EBITDA $160 million, cash flow $150 million, and earnings $90 million. The current market cap is $261.7 million, while enterprise value (EV) is $307.5 million.
Using these figures, we get the following multiples:
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- EV/EBITDA = 1.92
- P/E = 2.91
- P/B = 0.93
- P/CF = 1.74
- P/S = 0.87
Insider ownership is 29.7%, which is excellent. TL/TA (total liabilities/total assets) is 53.4%, which is decent. ROE is 97.9%, which is outstanding.
The Piotroski F_score is 8, which is very good.
Intrinsic value scenarios:
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- Low case: Book value per share at the end of 2022 will be about $3.24. This is 7% higher than today’s stock price of $3.03.
- Mid case: Free cash flow in 2022 will be about $90 million. Because this is probably the beginning of a structural bull market for oil—based on strong demand and constrained supply over the next 3 to 10 years—$90 million in free cash flow is a mid-cycle figure and the stock is worth a free cash flow multiple of at least 8. That works out to $8.35, which is 175% higher than today’s $3.03.
- High case: Because it’s probably a structural bull market for oil, free cash flow is likely to reach $180 million in the next few years. With a free cash flow multiple of 6, the stock would be worth $12.53, over 310% higher than today’s $3.03.
Risks
There will probably be a bear market and/or recession during which oil prices fall temporarily but then quickly rebound. In this case, IPOOF stock would fall temporarily but then quickly rebound.
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