EOT trade alert June 20, 2014
June 20, 2014
Trade Alert:
Buy TPLM October 2014 $12.50 Calls at $1.25 or better
Company Background:
Triangle Petroleum (TPLM) is an oil and gas company. Their focus is on the acquisition, exploration, development, and production of unconventional shale oil and natural gas resources in the Bakken Shale and Three Forks formations in the Williston Basin of North Dakota and Montana.
Short-Term Catalyst:
Oil and gas production in the US is booming. New technologies, like fracking, are allowing companies to unlock oil and gas that was previously uneconomical to extract.
Today, things like coalbed methane, coal seam gas, shale oil, shale gas, tight natural gas, tight oil, and tight sands are being explored and massive amounts of oil and natural gas are being pumped out of the ground.
In large part, the development of unconventional oil and gas has been led by smaller companies. The industry is ripe for consolidation as the industry hits full stride.
Now the big boys like Exxon Mobil (XOM) are moving in. And it’s helping push the valuation of the stocks in this space to new heights.
TPLM is an undervalued stock in the red hot US onshore oil and gas industry.
The company consists of three parts –
Tusa is the exploration and production company, RockPile is a services company that does the drilling and fracking, and Caliber Midstream owns the infrastructure assets.
Right now TPLM is in the process of expanding their production. Their goal is to ramp production up from around 10,000 barrels of oil per day currently to 12,600 barrels of oil per day by the second half of 2015.
Their oil services and infrastructure business are growing too. But the real value is in their production growth.
The stock recently broke out above resistance at $11.00 and looks to be heading much higher from here. Let’s grab call options on TPLM to cash in on the next leg higher.
Trade Details:
| Underlying Stock Symbol: | TPLM |
| Current Bid-Ask Price: | $0.90 – $1.05 |
| Option “Buy Up To” Price: | $1.25 |
| Break-Even On Stock At Expiration: | $13.75 |
| Maximum Risk Per Contract: | $125 |
Exit Strategy:
TPLM is trading at $11.99 per share. Resistance levels will be at $14.00 and again at $17.50. Remember, we want this stock to move higher. Support levels will be at $10.75 and $10.00. Conservative investors should look to exit at the first support or resistance level. Aggressive investors may want to hold for a bigger move.
Chart:
Category: EOT Trade Alert
