Location map of the Williston Basin, US and Canada (Photo credit: Wikipedia)
TPLM : NYSE MKT : US$6.67
BUY
Target: US$9.00
COMPANY DESCRIPTION:
Triangle Petroleum is an E&P company with operations in the Bakken and Three Forks shales of North Dakota and Montana. The company has diversified into the services business, mainly pressure pumping, and midstream
RAMP-UP COMING QUICKER THAN EXPECTED; REITERATE BUY, $9 PT
Investment recommendation
TPLM has ~86K net Williston Basin (WB) acres and is successfully transitioning its strategy toward an emphasis on operated drilling in the
Bakken/Three Forks (TF) in McKenzie/Williams Counties, ND. Significant production growth is continuing and vertical integration is progressing nicely, key drivers in our view to a higher stock price.
Investment highlights
TPLM reported FQ1/14 EPS/CFPS of $0.10/$0.26 vs. our $0.05/$0.25 and consensus of $0.07/$0.26. The sound beat was predominantly driven by higher sales volumes and revenues from the company’s RockPile (RPES) pressure pumping business. RPES contributed $13.1M of revenue vs. our estimate of $7.8M for the quarter, continuing to illustrate how meaningful vertical integration can prove to be to the top line.
Sales volumes for the quarter were at 2,684 Boe/d, nicely above our 2,562 Boe/d forecast. Current production is running at ~4,330 Boe/d based on a 21-day average. With first gas sales set to begin on June 14 and TPLM having moved to a three full-time/one parttime rig program from just two full-time rigs during FQ1/14, we expect a significant sales volumes acceleration in FQ2/14. We are modeling a 38% Q/Q increase to 3,617 oe/d.
Given the observed strength in FQ1/14 and the company seeming to be ahead of schedule, we are taking up our F2014 EPS/CFPS estimates to $0.57/$1.63 from $0.54/$1.62 as TPLM’s production and service businesses continue to accelerate.
Related articles
- Triangle Petroleum Corp -Q1 2013 Earnings Call (earningstranscripts.wordpress.com)
- Bakken ‘an industry, not a boom,’ speaker tells Montana audience (billingsgazette.com)
