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Josef Schachter InPlay Oil Corp IPO-T TOP PICK Apr 18, 2019

Small cap. Focused on the cardium. Book value is $2.69. No debt issue. Trading under 2x cash flow. Quite a bit of upside. Target of $2.50. Clean balance sheet. 10% volume growth, on of the few western Canadian energy companies that will have growth in 2019. No dividend. (Analysts’ price target is $2.14)

Josef Schachter

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$1.230

Stock price when the opinion was issued

Energy

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TOP PICK

About 70% liquids. Working on bringing in 4 more wells by years end. One of the few juniors where he sees decent growth. Balance sheet in good shape. Good management. Ridiculously cheap. No dividend. (Analysts’ price target is $1.99)

PAST TOP PICK

(A Top Pick Oct 09/18, Down 55%) He has a one year target of $1.60. Debt is not a problem. He thinks this is a cheap stock. This is a buy today on weakness.

HOLD

CR-T vs IPO-T? He owns CR-T, whose production is 29% liquids. IPO-T is focused on 66% liquids. He likes both and they are very cheap. He would add to holdings on both. Both have good balance sheets. CR-T is buying back shares as well.

BUY

A very small cap stock under $10M with debt over $50M. 66% of their production is liquids; the rest is nat. gas. They'll likely cut back production, but if they can keep production flat and free up some cash flow to pay the debt, they may get supports from their lenders. They'll be a long-term viable player. A good operator.

WAIT

He likes the management team and the assets. They recently took a $60 million impairment, which knocked their equity to $57 million, while debt is $53 million. They will probably be looking for Federal loans to provide solvency support. He would wait to see how it performs, perhaps into tax-loss selling later in the year.

DON'T BUY

It rose 4x since the mid-March low. Production is and will shut down in Q2 and Q3, and won't return until Q4. They are seeking financial support from the EDC and BDC, which are not giving support to any Canadian oil companies. There needs to be more support though reports today say that the rules of eligibility will change. IPO also needs higher oil prices, which he expects in Q4.

BUY

Small oil producer. Good solid company. Caveat is that it's small. Extremely cheap. A buy here. Will appreciate in the next year.

BUY ON WEAKNESS

Have been increasing production aggressively. They just acquired a company to add to their production. This acquisition should help them move from small cap to mid cap. It has had a nice move up from there. Looks attractive. Waiting for a pull-back.

BUY

Trevor Rose’s Insights - Trevor’s most-liked answers from 5i Research

IPO is a small cap oil and gas company. It is down about 10% over the last year, but has been trending up year-to-date. IPO also pays out a high yield at 7.7% and is cheap on a forward price-to-earnings basis at 7.6x. Revenues have been on the decline in 2023 while revenue and EPS have both missed forecasts for the last three quarters. The company has no cash but also minimal debt on its balance sheet with a debt-to-equity ratio of 0.15x. IPO pays out around 16% of its cash from operations in dividends over the last twelve months which is high, but attractive for income. We would say it is a good option tied to the price of oil and it offers investors an attractive income investment while being cheap on a forward earnings basis as well. We would say it is a moderate buy for oil and income exposure.
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Josef Schachter InPlay Oil Corp IPO-T TOP PICK Apr 18, 2019

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