ROK Resources Inc. (ROK:TSX.V) paid off its CA$12.1 million (CA$12.1M) debt in Q2/25, and other financial results during the quarter generally were as Research Capital Corp. expected, reported Analyst Bill Newman in an Aug. 14 research note.
"This positions ROK for strong growth in 2026, potentially including a step-up in high-return, open-hole multilateral drilling activity (OHML)," Newman wrote, referring to the company's many locations in Saskatchewan's Frobisher and Midale formations that are amenable to this drilling technique. OHML wells are associated with strong capital efficiency, rapid payouts and favorable royalty incentives, making them attractive.
Overall, ROK Resources has 110 booked drilling locations, most of them in Saskatchewan, and these encompass the OHML ones. With so many drill locations, ROK Resources has huge growth potential, noted Newman.
50% Uplift Implied
Research Capital reiterated its CA$0.30 per share target on the Canadian oil and gas explorer-developer, trading at the time of Newman's report at about CA$0.20 per share, the analyst noted. From this price, the return to target is 50%.
ROK Resources remains a Buy. The company has 218.6 million shares outstanding and a CA$43.72M market cap. Its 52-week range is CA$0.13–0.23 per share.
All Debt Eliminated
During Q2/25, ROK Resources monetized its crude oil hedge contracts and generated CA$6.9M, Newman reported. It used these funds to fully repay its credit facility that had been restructured into a CA$5M demand facility with more flexible terms.
At quarter's end, the company had CA$3.6M of working capital. Given oil's current low prices, ROK intends to limit capital spending and maintain financial flexibility, which Newman considers a prudent approach, he wrote.
A Look at the Numbers
Newman presented the key Q2/25 results. During Q2/25, ROK Resources produced an average of 3,729 barrels of oil equivalent per day (3,729 boe/d), an amount consistent with Research Capital's 3,633 boe/d estimate.
Adjusted funds flow amounted to CA$9M, or CA$0.04 per share, due to the gains realized from the hedge contract monetization. As such, the total was about three times Research Capital's estimate of CA$3M, or CA$0.01 per share.
Q2/25 operating costs were CA$31.07 per barrel of oil equivalent (CA$31.07/boe), up from CA$25.47/boe in the previous quarter. The increase mostly was due to higher workover and maintenance expenses and one-time facility repair costs.
From an operational standpoint, Q2/25 was "quiet," noted the analyst. The company only did two completions and spent only CA$1M in capex. It did not drill any new wells.
What is on Tap
Newman noted what to expect from ROK Resources in the near term. In Q3/25 the company plans to drill two low-cost re-entries and one OHML well in the Midale. In doing so, it will utilize existing infrastructure to minimize the capital spend.
As for the rest of the 2025 development program, original plans called for it commence in Q4/25, but the start could be pushed back if oil prices remain low.
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