Paid content: InPlay Oil Corp. paid Strikepoint News to produce this article.
Investor Education
Dividends and Disciplined Growth: Why InPlay Oil Is a Compelling Western Canadian Investment
InPlay Oil Corp. (TSX: IPO) pays a 6% dividend, trades well below its estimated net asset value, and has more than a decade of Tier 1 drilling inventory after two accretive acquisitions.
InPlay Oil Corp. (TSX: IPO; OTCQX: IPOOF) is a disciplined, sustainable Canadian light-oil producer with a high-quality asset base. The company pursues a two-pronged growth strategy: highly accretive acquisitions combined with top-tier organic growth when commodity prices support attractive returns. This strategy is executed by an experienced management team with a strong track record of disciplined capital allocation and is underpinned by a focus on maximizing free adjusted funds flow per share to maintain conservative leverage, fund continued accretive acquisitions and deliver significant returns to shareholders.
Valuation Disconnect
InPlay trades at a substantial discount to its estimated intrinsic net asset value, offering investors an attractive income stream together with significant capital-appreciation potential. The company pays an annual dividend of $1.08 per share, representing a yield of approximately 5.4% at a share price of $19.70, and has paid a dividend continuously since November 2022. Estimated net asset value based on total proved reserves is $31.60 per share, nearly double the current share price. Including total proved plus probable reserves, estimated net asset value increases to $47.77 per share.
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Successful, Accretive Acquisitions Power Growth
InPlay completed the $291 million Pembina Cardium acquisition in April 2025, immediately increasing adjusted funds flow per share by approximately 40% and free adjusted funds flow per share by approximately 65%. Integration of the Pembina assets has exceeded initial expectations, with the company now estimating approximately $22 million of annual synergies.
InPlay recently completed a $54.25 million acquisition of highly complementary Belly River assets that increased both adjusted funds flow and free adjusted funds flow per share by approximately 18%, while increasing Belly River production to approximately 2,000 boe/d and adding 50 net high quality drilling locations.
Together, these transactions have helped increase current production to approximately 20,100 boe/d more than double the company’s production on April 7, 2025 while strengthening its free adjusted funds flow profile.
Years of Drilling Runway
InPlay has a deep, high-quality drilling inventory across a substantially de-risked asset base. The company has more than 240 Tier 1 drilling locations, representing approximately 10 to 15 years of premium inventory. At WTI prices of US$65 to US$75 per barrel, these locations are estimated to generate internal rates of return of 134% to 233%, with payout periods of approximately 0.5 to 0.8 years.
InPlay also benefits from a low corporate decline rate of approximately 22%, which significantly reduces the sustaining capital required to hold production flat and maximizes free adjusted funds flow available for debt reduction, dividends and growth.
Financial Strength
InPlay’s conservative balance sheet provides flexibility to navigate commodity-price volatility, protect the dividend and pursue growth opportunities. Management targets long-term net debt to EBITDA of approximately 0.75x, while the company currently expects leverage of approximately 1.2x to 1.3x, below its internal ceiling of 1.5x.
InPlay has also strengthened its capital structure through an oversubscribed five-year, C$244 million unsecured bond carrying a 6.23% interest rate approximately 25% to 33% below the borrowing costs of comparable peers while retaining access to a C$250 million senior credit facility.
Delek Group was instrumental in helping InPlay secure this attractive bond financing. Delek is a strategically aligned shareholder holding a 32.7% interest in InPlay and intends to participate as a lead order in acquisition requiring equity financing to maintain its ownership position. Together with Delek’s extensive oil and gas experience and track record of value creation, this participation improves financing certainty, demonstrates conviction in InPlay’s transactions and provides meaningful support for the company’s long-term growth strategy.
In late May, the Company initiated a normal course issuer bid as an additional mechanism to return capital to shareholders, reflecting management’s belief that the shares were undervalued relative to the Company’s intrinsic value. In June, the Company repurchased and cancelled approximately 0.5% of its outstanding shares.
The Bottom Line
For investors seeking exposure to a high-quality Canadian light-oil producer, InPlay offers a differentiated combination of income, top-tier growth and compelling value. With more than a decade of Tier 1 drilling inventory, a low corporate decline rate, conservative leverage, a strategically aligned major shareholder and a valuation well below its estimated net asset value, InPlay provides an attractive dividend today together with meaningful long-term capital-appreciation potential.
In short, investors are paid while they wait as InPlay continues to execute its strategy, build per-share value and create the potential for the valuation gap to close.
Paid content: InPlay Oil Corp. paid Strikepoint News to produce and publish this article. Strikepoint News is a marketing and media company; this page promotes a client and is not investment advice or a recommendation to buy or sell any security.
