Thursday, September 01, 2022

Permex Petroleum (OILCF)
Well Completions Demonstrate Two-Pronged Approach to Growth

Michael Heim, CFA, Senior Research Analyst, Noble Capital Markets, Inc.

Refer to the full report for the price target, fundamental analysis, and rating.

 Permex announced positive results for five well recompletions of previously shut-in wells. The wells came on line at an initial rate of 50 BOE/d and stabilized at 35 BOE/d. By comparison, the company just reported production of 8,946 BOE for the fiscal nine months ended June 30, 2022 which equates to 32.8 BBL/d. Production from these five well essentially doubles production to a reported level of 71 BOE/d. Assuming net revenues double to a level near $300,000/qtr. and G&A returns to a historical level of $250,000/qtr. (last quarter was $1 million due to one-time legal, accounting, and marketing costs) then the company should be close to cash flow neutral.

Well recompletion and stimulation provide a good balance to in-fill drilling. While we are clearly focused on new drilling in the Breedlove Field in Martin County, it is worth remembering that Permex has ample opportunity to perform lower cost, lower risk, well completions and stimulation. The company has an additional 62 shut-in oil, gas, and salt water disposal wells in each of its properties remaining to be brought online. Recompletions have a high return on investment and should help fund in-fill drilling. As a reminder, we expect the company to drill one vertical and one horizontal well before yearend. The company reported $5.4 million in cash as of June 30, 2022, which should fund one if not both of the wells….

This Company Sponsored Research is provided by Noble Capital Markets, Inc., a FINRA and S.E.C. registered broker-dealer (B/D).

*Analyst certification and important disclosures included in the full report. NOTE: investment decisions should not be based upon the content of this research summary. Proper due diligence is required before making any investment decision.