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.

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."

"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." read more >

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The information provided above is from analysts, newsletters and other contributors. Please contact the company and visit its website before making an investment decision.
Investing Highlights
 
Strong Balance Sheet
 
Low base production decline rate
 
Generating cash flow per sale of $1.25 at WTI $60 US/bbl
catalyst Calendar
Q1
2015
Polymer Injection begins at Mantario
Q2
2015
Ongoing cash flow reducing debt
Q3
2015
Viking production growth resumes
Q4
2015
Onward Manville exploration program resumes
Rock Energy Inc. Content