Lean, Mean, Bakken Shale Producing Machine $TPLM
We are updating our favorite Bakken Shale stocks on under our Turn Key Oil community. One that is standing out considerably deserved some immediate attention.
Triangle Petroleum (TPLM) put together a very good quarter, but didn’t get rewarded as its stock traded up early, but pulled back on Thursday. This stock has had a very nice move since dropping below $5/share in late June. Triangle beat on the top and bottom lines, which shows us this company is well run for its size. Yesterday was better as an upgrade pushed Triangle’s stock up and finished at $7.33.
There were several big issues going into the second quarter earnings announcement. Triangle had missed EPS estimates for four quarters in a row. These were large misses in three of those quarters. This had created some downside pressure on Triangle’s stock price and created negative sentiment. Beating estimates in the second quarter could go a long way to remedying this. Production numbers and Rockpile Energy Services helped to increase revenues even with oil prices down in the quarter. Production for the second quarter was 103000 barrels of oil equivalent.
This was 400 Boe/d more than expectations. Rockpile accounted for more than one fourth of total company revenues. Rockpile isn’t the only story as Triangle is an integrated company, as it also formed Caliber Midstream. By forming both Rockpile and Caliber, it doesn’t need to wait on pressure pumping, or the building of pipelines. It also aids in setting costs, as it knows what charges will be for these services. Those services will also be completed in a timely manner, which gives shareholders more certainty of when wells will be completed and pipelines built. It is strange for a company this size to be this well managed and for its parts to work this well in concert.
The most recent catalyst to Triangle’s stock price was its financing by Natural Gas Partners. This was $120 million in convertible notes. These notes have a 5% interest rate. This deal is good for Triangle in several ways. The most obvious is the cash to speed up the development of its Bakken program. It also provides a partner that could continue to help fund further development or increase acreage. Currently, Triangle is looking for a partner of its Caliber Midstream business. It believes this will be done in the third quarter of this year.
Triangle’s well costs are not bad considering how early in development it is. Wells completed with ceramics on average cost $1 million more. Depending on the depth of the play, total well costs will run from $9 to $11 million. A savings of $400,000 to $500,000 could be realized using lighter weight ceramics, and Triangle is testing this estimate. I expect these numbers will improve significantly as Rockpile has only completed two wells to date, and really had only worked one month out of the quarter. Also, Caliber will help to improve costs as well. Water costs are significant in the Williston Basin, as trucking has gotten cheaper, but is still much more expensive than pipe.
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