Monthly Dividend Stock In Focus: InPlay Oil Corp.

Revealed on July fifteenth, 2025 by Aristofanis Papadatos

InPlay Oil (IPOOF) has two interesting funding traits:

#1: It’s providing an above-average dividend yield of 11.1%, which is greater than 9 occasions the typical dividend yield of the S&P 500.

#2: It pays dividends month-to-month as a substitute of quarterly.

Associated: Checklist of month-to-month dividend shares

You possibly can obtain our full Excel spreadsheet of all month-to-month dividend shares (together with metrics that matter like dividend yields and payout ratios) by clicking on the hyperlink beneath:

Monthly Dividend Stock In Focus: InPlay Oil Corp.

The mixture of an above-average dividend yield and a month-to-month dividend makes InPlay Oil a pretty possibility for particular person traders.

However there’s extra to the corporate than simply these elements. Hold studying this text to study extra about InPlay Oil.

Enterprise Overview

InPlay Oil is an oil and gasoline exploration and manufacturing firm targeted on growing gentle oil and pure gasoline belongings in Alberta, primarily concentrating on the Cardium and Stomach River formations.

The corporate combines horizontal drilling, enhanced oil restoration, and infrastructure optimization to maximise effectivity and returns.

In 2024, InPlay Oil posted common manufacturing of 8,712 barrels of oil equal per day, with 58% of the output attributed to crude oil and pure gasoline liquids (NGLs). The corporate is the biggest Cardium oil producer and is headquartered in Calgary, Canada.

As an oil and gasoline producer, InPlay Oil is extraordinarily delicate to the boom-and-bust cycles of the oil and gasoline trade. It has incurred losses in 5 of the final 10 years and has exhibited a markedly unstable efficiency file.

In 2015, it incurred extreme losses resulting from a steep lower within the costs of oil and gasoline. The corporate initiated a dividend solely in late 2022.

However, InPlay Oil has some benefits in comparison with well-known oil producers. Most oil and gasoline producers have been struggling to replenish their reserves because of the pure decline of their producing wells.

Supply: Investor Presentation

InPlay Oil is the best oil and gasoline producer in Cardium, which is the biggest pool of sunshine oil in Western Canada. The big scale on this extremely prolific space creates economies of scale and bodes properly for future manufacturing progress.

Within the first quarter of this yr, InPlay Oil posted an 8% lower in its manufacturing over the prior yr’s quarter. Given additionally the impact of a big lower within the common realized value of oil, the adjusted funds stream per share of the corporate declined 31%, from $0.13 to $0.09.

In April, InPlay Oil accomplished the acquisition of Pembina Cardium, which is anticipated to create greater than $15 million in annual synergies and increase the annual free funds stream per share by 40%. Due to this extremely accretive acquisition, we count on InPlay Oil to develop its funds stream per share from $0.34 in 2024 to $0.75 this yr.

In reference to the worldwide enterprise panorama for oil and gasoline producers, OPEC offered sturdy help to the value of oil through deep manufacturing cuts since 2021 however this technique approached its limits final yr.

The U.S., Canada and Brazil, which don’t belong to the cartel, have been rising their manufacturing and thus they’ve been gaining market share from OPEC.

This led many OPEC members, which depend on oil gross sales to fund their authorities budgets, to turn out to be dissatisfied with their decreased manufacturing quotas.

Angola exited OPEC at the start of final yr. Consequently, in April, OPEC started to unwind its manufacturing cuts, with a objective to boost its output by 2.2 million barrels per day till the top of 2026. As this strategic shift of OPEC is more likely to end in a world surplus of oil, the value of oil has declined this yr.

Nonetheless, it has remained above common and thus InPlay Oil is more likely to stay extremely worthwhile this yr, assisted additionally by the aforementioned acquisition.

Development Prospects

InPlay Oil has posted one of many highest reserve progress charges in its peer group over the past decade.

Supply: Investor Presentation

Due to a powerful file of worthwhile acquisitions, InPlay Oil has grown its manufacturing per share by 255% over the past decade and it has greater than doubled its proved plus possible reserves over the identical interval.

Administration has offered steering for 15% progress of manufacturing per share and 16% progress of reserves per share in 2025. Given additionally the confirmed capability of the corporate to amass worthwhile belongings and reap nice synergies from them, we count on 5% progress of funds stream per share over the following 5 years.

However, as an oil and gasoline producer, InPlay Oil is susceptible to the wild swings of the costs of oil and gasoline. The corporate posted file earnings per share in 2021 and 2022 due to the restoration of world oil consumption from the pandemic and the onset of the conflict in Ukraine, which led the costs of oil and gasoline to surge to a 13-year excessive in 2022.

Nevertheless, now that the worldwide oil market has absorbed the affect of the Ukrainian disaster and OPEC has begun to unwind its manufacturing cuts, the value of oil has moderated.

Consequently, the funds stream per share of InPlay Oil have decreased from an all-time excessive of $3.00 in 2021 and $2.61 in 2022 to $0.34 in 2024. We count on funds stream per share of roughly $0.75 this yr.

InPlay Oil has an honest steadiness sheet. Its curiosity expense consumes 37% of its working revenue whereas its internet debt is $152 million, which is 77% of the market capitalization of the inventory. Below regular enterprise circumstances, the corporate shouldn’t be more likely to have any drawback servicing its debt.

However, within the occasion of a extreme and extended downturn, InPlay Oil might face some monetary stress resulting from its considerably leveraged steadiness sheet, which has resulted from the acquisitions of the corporate.

Dividend & Valuation Evaluation

InPlay Oil is at present providing an above-average dividend yield of 11.1%, which is greater than 9 occasions the 1.2% yield of the S&P 500. The inventory is an fascinating candidate for revenue traders, however they need to bear in mind that the dividend is way from protected because of the dramatic cycles of the costs of oil and gasoline.

InPlay Oil has a excessive payout ratio of 105%, which is unsustainable over the long term. Nonetheless, due to its promising progress prospects, the corporate shouldn’t be more likely to lower its dividend sharply below the prevailing oil and gasoline costs.

In reference to the valuation, InPlay Oil is at present buying and selling for 9.5 occasions its anticipated funds stream per share this yr. Given the excessive cyclicality of the corporate, we assume a good price-to-funds stream ratio of 9.0, which is a typical mid-cycle valuation degree for oil producers.

Subsequently, the present funds stream a number of is increased than our assumed honest price-to-funds stream ratio. If the inventory trades at its honest valuation degree in 5 years, it can incur a 1.0% annualized drag in its returns.

Taking into consideration the 5.0% annual progress of funds stream per share, the 11.1% present dividend yield but in addition a 1.0% annualized headwind of valuation degree, InPlay Oil may supply a 12.1% common annual whole return over the following 5 years.

The anticipated return alerts that the inventory is an effective long-term funding, despite the fact that we now have handed the height of the cycle of the oil and gasoline trade.

Last Ideas

InPlay Oil has been thriving since 2021 due to a perfect setting of above-average oil costs. The inventory is providing an above-average dividend yield of 11.1%, albeit with a excessive payout ratio of 105%. Given its promising progress prospects and its affordable valuation, the inventory seems engaging.

However, the corporate has confirmed extremely susceptible to the cycles of the costs of oil and gasoline. Consequently, it’s appropriate just for affected person traders, who can endure excessive inventory value volatility.

Furthermore, InPlay Oil is characterised by low buying and selling quantity. Which means that it’s onerous to ascertain or promote a big place on this inventory.