Tag: Oil & Gas E&P

Hemisphere Energy Corporation (HMENF) – Results beat expectations on higher pricing and lower costs

Posted on by cpereira@noblefcm.com


Wednesday, November 22, 2023

Michael Heim, Senior Vice President, Equity Research Analyst, Energy & Transportation, Noble Capital Markets, Inc.

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

2023-2Q production rose as expected with new wells coming online. A robust summer of drilling resulted in higher production. Post-quarter flow rates allow us to bump up future production estimates. 

Realized prices came in better than expected. The basin discount was reduced adding to the rise in oil index prices. Management added swaps at attractive prices in response to higher oil prices.


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InPlay Oil (IPOOF) – September-quarter results

Posted on by cpereira@noblefcm.com


Friday, November 10, 2023

InPlay Oil is a junior oil and gas exploration and production company with operations in Alberta focused on light oil production. The company operates long-lived, low-decline properties with drilling development and enhanced oil recovery potential as well as undeveloped lands with exploration possibilities. The common shares of InPlay trade on the Toronto Stock Exchange under the symbol IPO and the OTCQX Exchange under the symbol IPOOF.

Michael Heim, Senior Vice President, Equity Research Analyst, Energy & Transportation, Noble Capital Markets, Inc.

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

Production increased 6% quarter over quarter despite continued curtailments and unplanned downtime. Curtailments and well pressure issues have hampered production for InPlay and other Canadian producers in recent quarters. InPlay invested $27.5 million during the quarter to drill and make infrastructure improvements. This represents more than half of the year’s capital expenditure budget. During the quarter, the company completed six wells and upgraded a natural gas facility to process 66% more gas.

InPlay reported strong results in the 2023-3Q and 2023-4Q should be better. Management indicated that its investments should lead to the fourth quarter being the highest production quarter of the year. Management did not make any changes to its guidance for 2023, 2024, and 2025 production and fund flow generation. With a drop in capital expenditures in the upcoming quarter, management should  have ample cash flow to pay dividends (7% yield), strategically repurchase shares, and explore small add-on acquisitions.


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Permex Petroleum (OILCD) – Permex completes share consolidation and announces public offering.

Posted on by cpereira@noblefcm.com


Tuesday, October 24, 2023

Michael Heim, Senior Vice President, Equity Research Analyst, Energy & Transportation, Noble Capital Markets, Inc.

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

Permex completed a 1 for 4 common share consolidation. The consolidation, which was effective October 23, 2023, was initially announced on October 19, 2023. The consolidation affects Permex shares on the Canadian Securities Exchange (CSE), the Frankfurt Stock Exchange and the OTCQB. With the consolidation, the number of outstanding shares has been reduced from approximately 2 million to 400,000. The consolidation was needed to be listed on the Nasdaq Capital Market. If completed at an assumed post-consolidation price of $7.64 per share, the offerings would generate $29 million.

Permex to issue common equity and warrants. On October 20, 2023, Permex filed a prospectus to issue up to 1.9 million common units with accompanying warrants and to issue up to 1.9 million pre-funded units and warrants. The warrant associated with the common units does not have a set exercise price, which we will assume will be near the common stock offer price. The warrants for the pre-funded common shares will have an exercise price of $0.01 per share. The new shares, if approved, will trade on the Nasdaq Capital Market under the symbols OILS and OILSW.


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*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. 

Hemisphere Energy Corporation (HMENF) – Production jump coming. A special dividend!

Posted on by cpereira@noblefcm.com


Friday, September 29, 2023

Michael Heim, Senior Vice President, Equity Research Analyst, Energy & Transportation, Noble Capital Markets, Inc.

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

2023 summer drilling program completed. Hemisphere drilled eight wells (6 for production) during the summer, as planned. Four had been completed by August 24th, as reported during second quarter results, so the completions were expected and in line with our model’s assumptions. Management indicated that capital expenditures for the rest of the year should be minimal and we do not expect additional wells to be drilled. 

Production is rising. Management reports that production has reached 3,200 boe/d, up from August production of 3,000 boe/d. Recall that production for the second quarter was slightly below our expectations, but we expected rates to rise as wells came on line.  With production finishing the quarter strong, we believe third quarter production should meet our projections for 3,050 boe/d and fourth quarter production of 3,200 boe/d which assumes some improvement from well optimization.


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*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. 

Indonesia Energy Corp. (INDO) – Government contract extension adds value

Posted on by cpereira@noblefcm.com


Tuesday, September 12, 2023

Michael Heim, Senior Vice President, Equity Research Analyst, Energy & Transportation, Noble Capital Markets, Inc.

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

Indo extended its Kruh Block contract five years with an increased after-tax split. Indo’s contract with Pertamina, the state-owned oil and gas company, now extends to September 2035. The amended contract increases Indo’s after-tax split to 35% from 15%. The extension, while not unexpected, comes after Indo had suspended drilling in the Kruh Block to complete a well workover. The favorable extension helps justify Indo taking its time in the Kruh Block as it completes a 3D seismic program to optimize drilling locations. We believe the government was willing to agree to the settlement as a way to spur Indo to increase drilling activity.

An operational update provides little new information. The company also updated investors regarding drilling plans in the Kruh Block and the Citarum Block. Management reiterated plans to drill 14 additional wells in the Kruh Block by the end of 2026 with the next well starting in 2024. Management did indicate that it expects to receive an environmental permit for seismic activity in the Citarum Block in 2023-4Q with work to begin in 2024-1Q. Our models assume one well drilled in the Citarum Block and two wells drilled in the Kruh Block in 2024.


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*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. 

Hemisphere Energy Corporation (HMENF) – Production a bit light, but recent drilling will help

Posted on by cpereira@noblefcm.com


Friday, August 25, 2023

Michael Heim, Senior Vice President, Equity Research Analyst, Energy & Transportation, Noble Capital Markets, Inc.

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

Production was a bit light, but new wells are coming. Production was flat in the June quarter versus last year and down 9% versus the previous quarter. Results were modestly below our expectations. Management indicated that it pushed drilling (and thus well completion) into the third quarter. Hemisphere remains on track to drill ten wells this year. The company reports that production is back up over 3,000 boe/d in August and appears heading towards a good jump in production in the December quarter when wells are completed.

Lower-than-expected production had an adverse affect on bottom-line financial results. With lower-than-expected production’ revenues, operating income, adjusted fund flow, and net income were all a few C$ million lower than projected in our models. Realized prices were in line with expectations as were operating costs and netbacks. 


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*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. 

Permex Petroleum (OILCF) – June-Quarter Results Reflect Production Delays

Posted on by cpereira@noblefcm.com


Wednesday, August 23, 2023

Michael Heim, Senior Vice President, Equity Research Analyst, Energy & Transportation, Noble Capital Markets, Inc.

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

Permex reported a loss of $0.74 per share as drilling delays put the company behind our original production schedule. Permex reported $157,019 in revenues for the fiscal third quarter ended June 30, 2023, a 43% decline from third quarter revenues last year. Permex receives sales from ownership interest in 78 wells in the Permian Basin as well as royalty interests in 73 wells. It completed its first well in the Breedlove Field (a transformative acquisition) in January and is working to turn the well into a horizontal well. We had hoped the well would be producing and Permex would have started on a second well by now.

The extension and repricing of a warrant program and subsequent exercises resulted in 273,410 addition shares and generated $688,092 in net proceeds. The number of fully diluted shares including warrants is now more than 3 million versus basic shares of less than 2 million. The proceeds, along with a $847,000 positive change in working capital, helped offset a $865,000 net loss in operating cash. Permex’s cash position at the end of the quarter was $764,386, not enough to drill a well. The balance sheet remains debt free. Management shelved plans for an equity offering and uplisting. Liquidity remains an issue.


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InPlay Oil (IPOOF) – Gas processing constraints, wildfire shut ins, and road closings combine to lower production

Posted on by cpereira@noblefcm.com


Wednesday, August 16, 2023

InPlay Oil is a junior oil and gas exploration and production company with operations in Alberta focused on light oil production. The company operates long-lived, low-decline properties with drilling development and enhanced oil recovery potential as well as undeveloped lands with exploration possibilities. The common shares of InPlay trade on the Toronto Stock Exchange under the symbol IPO and the OTCQX Exchange under the symbol IPOOF.

Michael Heim, Senior Vice President, Equity Research Analyst, Energy & Transportation, Noble Capital Markets, Inc.

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

A combination of negative events led to a 7.6% year over year and 6.1% quarter over quarter decline in production. Management estimates that the events reduced production by 1,350 boe/day. The decline was larger than expected and led to management taking down 2023 production guidance to 9,100-9,500 boe/day from 9,500-10,000 boe/day. The production decline is unfortunate but should be viewed as temporary. 


New wells coming on should boost production. Six wells have recently, or are about to, come on line. Initial well production is impressive. In addition, six new wells are planned for the rest of 2023. Management believes processing constraints should ease in the third quarter. Higher production, combined with easing processing constraints should help boost cash flow and earnings.


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Alvopetro Energy (ALVOF) – Second quarter results above expectations, price target raised

Posted on by cpereira@noblefcm.com


Friday, August 11, 2023

Alvopetro Energy Ltd.’s vision is to become a leading independent upstream and midstream operator in Brazil. Our strategy is to unlock the on-shore natural gas potential in the state of Bahia in Brazil, building off the development of our Caburé natural gas field and our strategic midstream infrastructure.

Michael Heim, Senior Vice President, Equity Research Analyst, Energy & Transportation, Noble Capital Markets, Inc.

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

Alvopetro reported financial results for the quarter ended June 30, 2023 that were above our expectations. Results reflect a decline in production volume which had been preannounced through monthly production releases and thus expected. Realized gas prices were above expectations. Favorable results also reflect a decline in royalty rates. Royalty rates for natural gas production are based on Henry Hub natural gas prices, not realized gas sales prices. Henry Hub prices have been weak relative to realized gas prices resulting in a lower rate per boe produced.

Alvopetro is taking steps to replace production. The decline in production began in April and reflect higher nominations claimed by Alvopetro’s partner in the Cabure Field. Higher partner nominations will mean Alvopetro will own more of future production when prices are expected to be higher. Meanwhile, Alvopetro has accelerated drilling in fields in which it has a 100% ownership. We believe production from these wells will replace the production decline and even has the potential to double production levels in the next four years using internally generated cash.


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*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. 

Hemisphere Energy Corporation (HMENF) – Financial results reflect recent investments

Posted on by cpereira@noblefcm.com


Friday, May 26, 2023

Michael Heim, Senior Vice President, Equity Research Analyst, Energy & Transportation, Noble Capital Markets, Inc.

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

Accelerated drilling is beginning to lead to strong production growth. Production rose 20% year over year and 7% quarter over quarter. After paring back drilling in 2020 when oil prices were low, the company has accelerated its drilling efforts. This has led to a doubling of production since 2020. With an active drilling program planned for the fall, look for production to show similar growth at the end of 2023 and the first quarter of 2024. 

But basin differential issues are leading to lower-than-expected pricing. Oil prices fell 19% year over year, but HME’s realized oil price fell 32%. The differential has increased in recent quarters with the last three quarters being significantly larger both in absolute terms and on a percentage basis. We would note that other western Canadian oil producers have reported a similar widening of basin differential. Whatever the reason, it is worth tracking and making adjustments in our models to reflect the widening differential.


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*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. 

Indonesia Energy Corp. (INDO) – 2022 Results Are In, Nothing New to Discuss Operationally, PT Reduced to Reflect Higher Share Count

Posted on by cpereira@noblefcm.com


Tuesday, May 02, 2023

Michael Heim, Senior Vice President, Equity Research Analyst, Energy & Transportation, Noble Capital Markets, Inc.

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

Indonesia Energy Filed Its 20-F (Foreign) Document with the SEC Providing Financial Data. Due to drilling and production delays, revenue growth has been slower than projected. The company continues to report negative cash flow and earnings as limited revenues are hard pressed to cover G&A costs. The result was a $4.5 million loss from operations for the year, an EBITDA loss of $3.5 million, and negative net income of $3.1 million ($0.35 per share). The results were below our expectations, although the Indo story is really one of operating developments, not near-term results.

Operations are quiet. The filing largely repeated previously stated plans for drilling in the Kruh Block (4 in 2024, 6 in 2025, and 4 in 2026). INDO has drilled four wells in the Kruh Block, the last of which is still awaiting final flow test results but expected to be put in production mid 2023. After the last well, the company put new drilling on hold to complete additional seismic studies.  Importantly, limited production has meant that it may not be able to fully recover costs spent under the revenue sharing agreement (INDO has filed for an extension). 


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Permex Petroleum (OILCF) – Company Presentation Provides A Few Company Updates

Posted on by cpereira@noblefcm.com


Thursday, April 27, 2023

Michael Heim, Senior Vice President, Equity Research Analyst, Energy & Transportation, Noble Capital Markets, Inc.

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

CEO/P Mehran Ehsan made a presentation at the Planet Microcap Showcase on April 26. The short, ten-minute presentation largely restated the company’s case that there is a disconnect between its asset value and its stock price. Mr. Ehsan once again pointed to a reserve study of its properties that values its properties at $428 million using a 10% discount rate versus the stock’s current enterprise value of $9 million. If one were to value the company based on just proved reserves, the value would still be $128 million. In fact, the value from only wells currently producing is $12 million, still above the current market capitalization.

Management believes the disconnect stems from its listing on the OTCQB exchange which limits manager investments in the company. The company has dropped plans to list on the New York Stock Exchange and now plans to list on the NASDAQ exchange. We believe such a move is prudent and that it will help reduce the valuation disconnect. This is especially important given Permex’s need for capital to drill out additional wells. Along those lines, management indicated that it plans to convert a vertical well drill last fall to a horizontal well. The drilling will use $1.1 million of the $1.67 million in cash on hand and take a few months to complete.


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InPlay Oil (IPOOF) – Results meet expectations, new drilling may be accelerating growth

Posted on by cpereira@noblefcm.com


Thursday, March 16, 2023

InPlay Oil is a junior oil and gas exploration and production company with operations in Alberta focused on light oil production. The company operates long-lived, low-decline properties with drilling development and enhanced oil recovery potential as well as undeveloped lands with exploration possibilities. The common shares of InPlay trade on the Toronto Stock Exchange under the symbol IPO and the OTCQX Exchange under the symbol IPOOF.

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

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

Results demonstrate strong growth, generally meeting expectations. Annual production volumes came in at the lower end of guidance but 58% above last year. Higher production levels in the area may be beginning to show signs of affecting takeaway capacity (see third party curtailment and widening basis discount differentials). Weak summer natural gas prices bounced back nicely in the fourth quarter.

Drilling is accelerating and creating higher producing wells. The company drilled 17.5 net wells in 2022 surpassing our 15 well estimate. Management reports that initial production rates for recent wells were “significantly above internal expectations”. InPlay has been shifting towards longer horizontal laterals and spending more on infrastructure. Production increases seem to justify the higher costs. Management believes the steps it is taking will offset recent curtailments and reiterated 2023 production guidance.


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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.