Why Angle Energy Shares Angled Up

Is this meaningful? Or just another movement?

The Motley Fool

Although we don’t believe in timing the market or panicking over market movements, we do like to keep an eye on big changes — just in case they’re material to our investing thesis.

What: Shares of oil and gas explorer Angle Energy (TSX: NGL) popped 10% today after its third-quarter operational update impressed Bay Street.

So what: The stock has plunged over the past year on a string of disappointing quarters and general energy malaise, but yesterday’s update —  third quarter production is estimated to be 10,100 to 10,200 boe/d (32% light crude oil and condensate, 26% NGLs, and 42% natural gas) — suggests that things are starting to turn. Operating costs at its key Harmattan Cardium field are even down between 25% and 30% from April 2013, giving analysts some decent visibility into Angle’s profitability levels as well.

Now what: While management simply maintained its full-year production guidance, costs should keep coming down. “The Company is benefiting from its multi-well pad drilling strategy with well costs being reduced from approximately $3.2 million to approximately $3.0 million on a recent Harmattan Cardium well,” Angle said in a statement. “Angle expects capital efficiencies to continue to improve as it fully executes on its multi-well pad drilling program.” More importantly, with the stock still well off about 35% from its 52-week highs and trading at a forward P/E of 8, there might even be some upside left to profit from that improvement.

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Fool contributor Brian Pacampara doesn’t own shares in any companies mentioned.  The Motley Fool doesn’t own shares in any of the companies mentioned.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

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