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Co.'s Post-2022 Deals Increase Reserves, Decrease Debt

Source: Bill Newman

 

April 25, 2023 (Investorideas.com Newswire) This Canadian oil and gas firm is well-positioned financially, such that it could pay off its debt this year and have cash left over to spend on growth or a return of capital program, noted a Research Capital Corp. report.


Rok Resources Inc. (ROK:TSX.V) updated its amount of reserves to account for its two 2023 transactions, and the result was a 24% increase in the total, reported Research Capital Corp. analyst Bill Newman in an April 20 research note.

"Through the completion of these transactions, Rok has increased reserves within a more concentrated land base while significantly reducing net debt," Newman wrote.

Possible Gains Compelling

On this news, Research Capital reiterated its Buy rating and CA$0.75 per share price target on this Canadian company engaged in oil and gas exploration and development in Saskatchewan and Alberta. Its current stock price, in comparison, is about CA$0.38.

The price gap implies a nearly 100% potential gain for investors.

Net Effects of Transactions

The first of the two deals mentioned was an acquisition in January 2023 of about 1,000 barrels of oil equivalent per day (1 Moe/d) of net production in southeast Saskatchewan, Newman relayed. The second, transacted earlier this month, was the disposition of non-core assets with combined production of about 500 barrels of oil equivalent per day.

As for reserves, Newman highlighted these deals resulted in a 24% boost to net Proven and Probable (2P) reserves, a 35% uptick in the 2P net present value and an increase in booked drilling locations to 124 from 58, from a current production base of about 3.75 Mboe/d.

Regarding net debt, it dropped to about CA$10 million (CA$10M) from CA$35.4M thanks to the transactions.

Strong Financial Position

Research Capital remains bullish on Rok.

"Rok has repositioned the company with a high working interest in two focus core areas with a large drilling inventory, providing years of organic growth potential," wrote Newman.

With its current financial situation, Newman pointed out, Rok has enough cash flow to fund operations and continue paying down its debt, which it is doing. In fact, the company could pay it all off this year.

Also, Rok has options for what to do with some of its cash, and they include returning some capital to shareholders in the form of a dividend or share buyback and/or using it to accelerate growth.

Disclosures:

1) Doresa Banning wrote this article for Streetwise Reports LLC and provides services to Streetwise Reports as an independent contractor. She or members of her household own securities of the following companies mentioned in the article: None. She or members of her household are paid by the following companies mentioned in this article: None.

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3) Comments and opinions expressed are those of the specific experts and not of Streetwise Reports or its officers. The information provided above is for informational purposes only and is not a recommendation to buy or sell any security.

4) The article does not constitute investment advice. Each reader is encouraged to consult with his or her individual financial professional and any action a reader takes as a result of information presented here is his or her own responsibility. By opening this page, each reader accepts and agrees to Streetwise Reports' terms of use and full legal disclaimer. This article is not a solicitation for investment. Streetwise Reports does not render general or specific investment advice and the information on Streetwise Reports should not be considered a recommendation to buy or sell any security. Streetwise Reports does not endorse or recommend the business, products, services or securities of any company mentioned on Streetwise Reports.

5) From time to time, Streetwise Reports LLC and its directors, officers, employees or members of their families, as well as persons interviewed for articles and interviews on the site, may have a long or short position in securities mentioned. Directors, officers, employees or members of their immediate families are prohibited from making purchases and/or sales of those securities in the open market or otherwise from the time of the decision to publish an article until three business days after the publication of the article. The foregoing prohibition does not apply to articles that in substance only restate previously published company releases.

Disclosures for Research Capital Corp., Rok Resources Inc., April 20, 2023

Analyst Certification I, Bill Newman, CFA, certify the views expressed in this report were formed by my review of relevant company data and industry investigation, and accurately reflect my opinion about the investment merits of the securities mentioned in the report. I also certify that my compensation is not related to specific recommendations or views expressed in this report. Research Capital Corporation publishes research and investment recommendations for the use of its clients. Information regarding our categories of recommendations, quarterly summaries of the percentage of our recommendations which fall into each category and our policies regarding the release of our research reports is available at www.researchcapital.com or may be requested by contacting the analyst. Each analyst of Research Capital Corporation whose name appears in this report hereby certifies that (i) the recommendations and opinions expressed in this research report accurately reflect the analyst’s personal views and (ii) no part of the research analyst’s compensation was or will be directly or indirectly related to the specific conclusions or recommendations expressed in this research report.

Relevant Disclosures Applicable to Companies Under Coverage Relevant disclosures required under IIROC Rule 3400 applicable to companies under coverage discussed in this research report are available on our website at www.researchcapital.ca

General Disclosures: The opinions, estimates and projections contained in all Research Reports published by Research Capital Corporation ("RCC") are those of RCC as of the date of publication and are subject to change without notice. RCC makes every effort to ensure that the contents have been compiled or derived from sources believed to be reliable and that contain information and opinions that are accurate and complete; RCC makes no representation or warranty, express or implied, in respect thereof, takes no responsibility for any errors and omissions which may be contained therein and accepts no liability whatsoever for any loss arising from any use of or reliance on its Research Reports or its contents. Information may be available to RCC that is not contained therein. Research Reports disseminated by RCC are not a solicitation to buy or sell. All securities not available in all jurisdictions.

Potential Conflicts of Interest All Research Capital Corporation ("RCC") Analysts are compensated based in part on the overall revenues of RCC, a portion of which are generated by investment banking activities. RCC may have had, or seek to have, an investment banking relationship with companies mentioned in this report. RCC and/or its officers, directors and employees may from time to time acquire, hold or sell securities mentioned in our Research Reports as principal or agent. RCC makes every effort possible to avoid conflicts of interest, however readers should assume that a conflict might exist, and therefore not rely solely on this report when evaluating whether or not to buy or sell the securities of subject companies.

RC USA INC.: Information about Research Capital Corporation’s Rating System, the distribution of our research to clients and the percentage of recommendations which are in each of our rating categories is available on our website at www.researchcapital.com. The information contained in this report has been drawn from sources believed to be reliable but its accuracy or completeness is not guaranteed, nor in providing it does Research Capital Corporation assume any responsibility or liability. Research Capital Corporation, its directors, officers and other employees may, from time to time, have positions in the securities mentioned herein. Contents of this report cannot be reproduced in whole or in part without the express permission of Research Capital Corporation. US Institutional Clients - Research Capital USA Inc., a wholly owned subsidiary of Research Capital Corporation, accepts responsibility for the contents of this report subject to the terms and limitations set out above. US firms or institutions receiving this report should effect transactions in securities discussed in the report through Research Capital USA Inc., a Broker - Dealer registered with the Financial Industry Regulatory Authority (FINRA).

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