Friday, November 18, 2022
Michael Heim, CFA, Senior Research Analyst, Noble Capital Markets, Inc.
Refer to the full report for the price target, fundamental analysis, and rating.
Permex Petroleum decided to postpone its listing on the NYSE American due to market conditions. The company also indicated that a registration statement with the SEC has not yet become effective. The shares of Permex (now trading as OILCD) have fallen approximately 50% following the announcement of a 2 million (later raised to 3.6 million) common share offering. The offering was to be completed in conjunction with the move to the NYSE. Prior to the uplisting and registration announcement, Permex completed a 1-60 reverse stock split.
We are adjusting our estimates and price target to reflect a lower share count associated with the reverse stock split. Our new price target is now $40 per share versus our pre-stock split price target of $4 per share. We have increased our price target by less than a 60-1 multiple due to the following reasons. We have increased the discount rate we are using for the company to reflect what we view as increased financing risk. In addition, we have slowed the assumed pace of new well drilling to one every other quarter instead of one per quarter. We also believe the company will focus primarily on less expensive, but less productive, vertical wells until it starts generating cash flow to fund drilling.
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.