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Rock Energy Inc.


Rock Energy Inc. is a growth-oriented western Canadian energy producer that is focused on building a portfolio of oil and natural gas producing assets with predictable, sustainable cash flow. The company's current assets are located along the Alberta-Saskatchewan border near the towns of Kindersley and Kerrobert. During Q1/14, Rock produced an average of 4,899 boe/d.

The information provided below is from analysts, newsletters and other contributors. Please contact the company and visit its website before making an investment decision.

Expert Comments:

David Ricciardi, Jennings Capital (11/10/14) "Rock Energy Inc. disclosed Q3/14 production on October 6, at approximately 4,700 boe/d, with actual production averaging 4,747 boe/d, approximately 5% natural gas. . .Rock has not altered its 2014 average production guidance of 4,9005,100 boe/d and has been able to catch up with the drilling program and restore production, which is currently averaging ~5,300 boe/d."

Nav Malik, Octagon Capital Corporation (11/6/14) "Rock Energy Inc. posted solid year-over-year growth in Q3/14. . .production averaged 4,747 boe/d (95% oil and NGL) in Q3/14, in line with previously issued guidance, and 22% higher than last year. . .we are maintaining our Buy recommendation. . .Rock is currently trading at an EV/DACF (2015E) multiple of 3.4x, which we believe represents attractive value."

Ken Lin, Paradigm Capital (11/6/14) "We believe the conservative commodity forecast gives Rock Energy Inc. the opportunity to outperform its guidance with slight increases in commodity prices. We continue to believe that Rock is a good option for investors looking for junior heavy oil exposure."

Thomas Matthews, Alta Corp Capital (11/6/14) "Although Rock Energy Inc.'s 2015 production guidance of 5,400 boe/d was lower than what we (and the Street) were expecting, the difference can be attributed to a lower-than-expected budget ($90M versus our $100M expectation) and not operational difficulties. Based on its preliminary 2015 guidance (at $80/bbl WTI), Rock will still deliver above average growth into 2015 (year-over-year CFPS and price-per-share (PPS) growth of 25% and 7%, respectively) while maintaining a healthy balance sheet (0.7x D/CF in 2015). Upon stabilization of the commodity price, we believe that Rock's financial flexibility will allow it to accelerate their Viking drilling program resulting in positive revisions to analyst's CFPS and PPS estimates."

Chad Ellison, Dundee Capital Markets (10/7/14) "Rock Energy Inc. announced the addition of a new director, Frank Walsh, and provided an operational update with production essentially in line with our estimate despite wet weather delays. . .the board appointment adds operational expertise. . .we reiterate our Buy recommendation."

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The Energy Report Interview with Malcolm Gissen (9/11/14) "Rock Energy Inc. is deeply undervalued and a takeout candidate. There is much to like about Rock. The company has low declining wells, adequate capital and a clean balance sheet, all of which have helped it grow production. Rock is also enjoying internal rates of return of over 100% on a good number of its wells.

TER: Rock sold off its heavy oil acreage and has become instead a light-to-medium oil producer. What's the significance of that?

MG: It means better pricing. I think the company's decision will pay off. . .Rock could be acquired by one of the larger Canadian or American companies, because [it has] very attractive resources and has derisked [its] investments." More >

Chad Ellison, Dundee Capital Markets (8/13/14) "Rock Energy Inc. reported a record Q2/14, with production at 4,988 boepd and CFPS f.d. of $0.46, edging ahead of our estimates of 4,936 boepd and $0.46, which were the high on the Street (actual cash flow was 3% higher, variance in f.d. share count). . .we reiterate our Buy recommendation with an increased CA$11.75 target (from CA$11.50)."

Street Smart Investor, Seeking Alpha (8/5/14) "Rock Energy Inc. has a high-impact exploration program lined up for FY/14 and FY/15 and this will translate into strong reserves and production growth. . .the company is gaining in operational excellence in its core assets and as the high-impact exploration continues for the remainder of FY/14 and for FY/15, high drilling success will keep the sentiments positive. . .while its stock has surged in the last year, there is still significant upside potential. . .Rock Energy is a good junior exploration company to hold with a combination of strong production growth and healthy financials. I rate Rock Energy as a Strong Buy."

The Energy Report Interview with Bill Bonner (6/12/14) "About 18 months ago there was a pipeline bottleneck in Cushing, Oklahoma. The oil flowed in and could not pipe out. Crude by rail saved the day, bypassing Cushing. We bought stock in companies that were able to transport heavy oil to market using crude by rail. One of those companies was Rock Energy Inc. Rock is successfully developing its light oil assets, as well as heavy oil. Rock should ultimately trade for about five times cash flow, at about $10/ share. We bought the stock at $1 plus change; it is about $7 today and a core position in our energy fund." More >

Alistair Toward, PI Financial (5/14/14) "Rock Energy Inc.'s Mantario enhanced oil recovery polymer flood scheme was not only granted regulatory approval but this approval came with a generous royalty incentive that is expected to generate $40M ($1/share) in royalty savings over the FY15-16 time frame. . .so profound is the company's royalty incentive news that it effectively gives Rock (and its valuation) fresh legs. . .our increased target of $9.50 (from $7.25) is entirely cash flow driven."

Darrell Bishop, Haywood Securities (5/13/14) "Rock Energy Inc. announced Q1/14 results overnight, highlighted by record cash flow that was ahead of our expectations, increased guidance for 2014 and official approval for the enhanced oil recovery (EOR) royalty incentive program at Mantario. . .we see room for near-term upside as investors come to realize that the Viking play is real and Mantario's EOR potential is significant."

Chad Ellison, Dundee Capital Markets (5/13/14) "Rock Energy Inc. reported its Q1/14 with production of 4,899 boepd and CFPS of $0.37. . .this marks the sixth consecutive quarter the company has beat estimates and the fifth that it has increased its guidance as Rock's low-decline asset base, strong well performance and exploration success continue to surpass expectations."

Ken Lin, Paradigm Capital (4/24/14) "Rock Energy Inc. announced its 2013 results and reserves. . .Rock achieved 2013 cash flow per share of $0.76 compared to our estimate of $0.73, due to lower-than-anticipated operating expenses. . .Proved reserves increased 17% from 5.8 MMboe at the end of 2012 to 6.8 MMboe this year. . .we are encouraged with Rock's positive results in 2013 and its significant increase in reserves; the increased guidance and focus on the Mantario pool provide strong catalysts for 2014. With a strong balance sheet and encouraging results, Rock is beginning to prove up its core assets."

Chad Ellison, Dundee Capital Markets (4/17/14) "The last four quarterly reports have given Rock Energy Inc. the opportunity to revise its guidance upward and we expect this quarter to be no different; formal approval for preferred royalty treatment on its Mantario polymer enhanced oil recovery project would be a catalyst. . .this will provide $2030M in credits through reduced royalty rates (1% from 2530%) at Mantario, which will meaningfully impact the corporate average. With the royalty break, we now forecast Rock to have the third highest corporate netback in our coverage universe in 2015. . .we consider the name one of our top ideas."

Greg Shaw, Jennings Capital (4/11/14) "After reviewing Rock Energy Inc.'s latest presentation, we have increased our 12-month target to $8 from $6.25. . .Rock's balance sheet remains well positioned, with net debt to cash flow of 0.6x for 2014E, which reduces to 0.3x in 2015E. . .changes to our net asset value include an expanded upside associated with the Onward Viking development program, to reflect a level of success associated with the current 17-well drilling program. . .additional upside to our target is possible from ongoing exploration activities and the continued expansion of the Mantario pool boundary. . .we reiterate our Buy recommendation."

Alistair Toward, PI Financial (3/31/14) "Rock Energy Inc.s recent valuation gains are the product of grass roots exploration successes having paved the way for large-scale low-risk exploitation. We see more of the same on the horizon for this company and reiterate our Buy/Top Pick recommendation."

Robert Fitzmartyn, FirstEnergy Capital (3/25/14) "In Q4/13, Rock Energy Inc. reported more strong financial and operating results with cash flow of $0.23/diluted share exceeding our estimate by ~12%, with corresponding production and capex in line with our prior forecasts. Given its continued operational success in Q1/14E to date at both Mantario and Onward, the company has increased its 2014E budget to $85M with a corresponding boost to annual average 2014E production between 4,5004,700 boe/d. . .based on our revised forecasts, which see 2014E and 2015E increase by +42% in each year, we have increased our target price while maintaining our Outperform ranking."

Grant Daunheimer, GMP Securities (3/25/14) "Rock Energy Inc. reported a plethora of news, all of which, in our opinion, should lead to a higher share price going forward. In 2014, we believe the company will significantly expand its potential Viking resource, further de-risk its Mantario oil pool, begin injecting water into Mantario, and further test early exploration success at Onward. With the sale of its legacy heavy oil assets and the renewed focus on higher quality oil barrels, we expect Rock Energy will materially increase its corporate netback while delivering per-share growth to its shareholders."

Darrell Bishop, Haywood Securities (3/24/14) "Rock Energy Inc. reported strong year-end results and provided an operations update that was ahead of expectations on several fronts, transforming the company into a higher netback, lower-cost producer with several years of visibility to generating top performance. . .we reiterate our Buy rating and are increasing our target price."

Trevor Reynolds, Acumen Capital Research (3/24/14) "Rock Energy Inc. continues to deliver exceptional growth while maintaining a strong financial position, reporting Q4/13 production of ~4,000 boe/d. The company has increased production organically ~50% year over year. Operating netback, including realized hedging, came in above our estimate, beating cash flow projections by ~5%."

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