Monday, August 08, 2022

Permex Petroleum (OILCF)
Coverage initiated with an Outperform rating

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

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

Company is at a growth inflection point. The company is about to begin a drilling program that could significantly grow its assets and cash flow generation. We anticipate the company to reach a position of being cash flow positive in 2023.  Permex has the capital already in place to begin its expansion. As of March 31, 2022, the company had C$8.4 million in cash and virtually no debt. We believe Permex has adequate capital at its disposal to begin the first stage of its drilling program.

Assets that were acquired in the down cycle are now worth significantly more.  Permex management seeks to acquire assets during energy downcycles (such as the period we witnessed in the late teens) and exploit them during the upcycles (such as we are currently witnessing). According to management, Permex acquired over 11,000 acres at an average price of approximately $2,000/acre in areas that have been sold recently for prices 20-30 times higher.

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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.