Triangle Petroleum (TPLM) Stock: Why It’s Up & Weighing The Risks

Triangle Petroleum Corporation (NYSEMKT: TPLM)

Triangle Petroleum Corporation is having an incredible day in the market today, and for good reason. The company said that it is selling a key energy services subsidiary. Today, we’ll talk about the news, what we’re seeing from the stock as a result, the risks surrounding the stock, and what we can expect to see from TPLM ahead. So, let’s get right to it…

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TPLM Said To Be Selling RockPile Energy Services

Triangle Petroleum Corporation, like many companies at its level, has a decent list of subsidiaries. One of those subsidiaries is known as RockPile Energy Services. RockPile Energy Services is the hydraulic fracking unit owned by the company. However, in an early morning announcement, the company said it would be selling the subsidiary.

In the announcement, we learned that White Deer Energy, an energy-focused private equity firm that operates out of Houston and New York, will acquire RockPile. This is incredibly important, as TPLM has been struggling with regard to capital, and the deal should reduce pressures added by the subsidiary while offering an upfront payment. Unfortunately, details with regard to the amount of money that the company will receive as a result of the sale have not yet been disclosed. In a statement surrounding the news, Curt Dacar, CEO at Rockpile, had the following to offer:

This is an exciting day for everyone at RockPile. When we started the process of identifying a new capital partner, I could not have imagined a better outcome than teaming up with White Deer Energy…”

How The Stock Reacted To The News

One of the first things that we learn as investors is that it’s important to watch the news closely. After all, news moves the market. In this particular case, the news released with regard to TPLM was overwhelmingly positive. So naturally, we’re seeing an incredibly positive reaction in the market today. Currently (1:05), the stock is trading at $0.38 per share after a gain of $0.14 per share (55.43%) thus far today.

This Looks Exciting, But What Are The Risks?

At first glance, this trend may look like an exciting opportunity. However, when we dig into the stock, we start to see big risks surrounding Triangle Petroleum Corporation. Here are some big issues that I have with the company:

  • Earnings Are Gone – Before the oil supply glut and crisis, TPLM was doing relatively well, producing profits each step of the way. However, in the last 3 quarters, the company has reported losses. This is an overwhelmingly concerning trend, in my opinion.

  • Insiders Don’t Seem Optimistic – Unfortunately, insider trading isn’t providing any sort of optimism. In fact, all we’ve seen recently have been insider sales when it comes to TPLM. In fact, in the last 3 months, insiders haven’t purchased a single share. However, they have sold 2,032,734 shares. If we look over the past 12 months, the insider view gets even more concerning. While 173,955 shares have been purchased by insiders in the past year, they’ve sold 6,045,740 shares in the past year, for a net number of shares sold coming in at 5,871,785. Based on these numbers, it’s clear that insiders are losing faith in the company’s ability to grow.

  • Debt Is The Final Nail – For me, another big issue with regard to Triangle Petroleum is the amount of debt the company has. Currently, they are nearing the $1 billion mark. For a company with decreasing cash flows, growing quarterly losses, and a lack of positive movements among management, this is a big deal.

What We Can Expect To See Moving Forward

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While TPLM is likely to continue to see gains in the short run based on the RockPile Energy Services sale, the long-run picture doesn’t look good, my friends. At the end of the day, the company is in a rough spot when it comes to debt, insider opinions, and earnings. With prospects continuing to be concerning for the oil market, this one is far too risky for me.

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2 thoughts on “Triangle Petroleum (TPLM) Stock: Why It’s Up & Weighing The Risks”

  1. Interesting article. Thank you for attempting to lay out both the pros and cons. Obviously, if the rockpile sale brought any value to the parent company, a number would help. But isn’t it enough that they cleared off a ton of debt? Speaking of debt, look at the balance sheet. Where are you getting this 1Billion figure? LAST YEAR’s balance sheet? I see 292M, not “a number approaching 1 billion”. Please explain your source of that information.

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