Opportunities in smallcaps header image 2

TPLM finds 69Tcf of natural gas.

May 22nd, 2008 · No Comments

We’re terribly sorry. We noticed a posting on the IOC message board a couple of days ago about a company, Triangle  Petroleum (TPLM). That message noticed the company had discovered a truly amazing amount of natural gas. 69Tcf…

The stockprice was already climbing then, but at $1.40. What’s more, it’s not just the company saying this, but an independent engineering bureau.

Now, this is a company which we actually somewhat followed a couple of years ago. It’s stock price reached as high as $7, but the prospects seemed to take ever longer, so at some point, a couple of years ago, we stopped following it.

Our first urge was to immediately put out a buy here (and now we wish we had done that) as 69Tcf is such a large number, that basically it’s rather difficult to think of a scenario in which that stock price would not have gone up.

Then, the rise actually stalled, and we hate to write about things we do not have a grip off. We can only do so much, and researching this company is a little bit more tricky than you might think.

For starters, they would be lucky if they could recover just 10% of that gas. And we really don’t know how expensive that would be, how many wells they have to drill, how many dilutions (finance of the company is in pretty bad shape) are necessary to do that.

However, we should have trusted our gut feeling and rushed out a buy. That news is just way too good. The stock price is now at 2.20 and climbing, basically doubling from before the announcement. With these kind of increases, financing will get a lot easier. We think it’s still not too late to get in, with two proviso’s

  • we haven’t done our homework, we really do not know how many wells they have to drill, at what cost, etc.
  • it’s now a little overbought already

As a note though, this is not the only property they have, and they’re already producing gas and selling it (albeit in very low quantities still, but all bits help). Interesting development though.

Tags: TPLM