InPlay Oil (IPO.TO and IPOOF) Valuation Update - Dec 9

[dan_s]

Based on the new information that I got at today's EPG luncheon I have updated my forecast valuation model for IPO.TO. Only a few minor adjustments needed to be made. I have a HIGH level of confidence in my model.

IPO.TO closed at $12.88Cdn today, up 31% YTD. < My current valuation stays at $17.00Cdn/share, which translates to $12.07US for IPOOF. < InPlay pays monthly dividend that add up to $1.08Cdn/year for annualized yield of 8.38%. InPlay's strong free cash flow is more than double the current dividends. InPlay only has 27.9 million shares outstanding.

The Pembina Area Acquisition that closed on April 7th is a truly Transformational deal for InPlay.
> More than doubled production
> InPlay completed two more high-rate horizontal wells mid-November.
> Q4 production s/b approximately 19,500 Boepd (49% crude oil, 39% natural gas and 12% NGLs)
> Unless oil prices go higher, InPlay will have a conservative drilling program in 2026 (6 to 8 horizontal wells) with no new wells until after Spring Breakup. If WTI firms up to around $65US/bbl, InPlay can quickly add more wells in 2H 2026.
> My 2026 forecast is based on production of 19,000 Boepd. Free cash flow should be $50 to $60 Cdn million.
> Doug wants to focus on generating free cash flow to pay dividends and pay down debt.
> All of their Pembina leasehold is held-by-production.
> There are several Pembina asset packages available today. InPlay is the best operator in Pembina, so they are the likely buyer.

Most Important: Doug stressed the importance of having Delek Group Ltd. as their largest shareholder. Delek will support more acquisitions with goal of pushing InPlay's production up to 40,000 Boepd by 2030.

[dan_s]

My updated forecast model has been posted to the EPG website.

InPlay is a "Top Pick" in our High Yield Income Portfolio.