Why Trilogy Energy Shares Triumphed Today

Is this meaningful? Or just another movement?

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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 Trilogy Energy (TSX: TET) popped 13% today after providing an operational update that impressed Bay Street.

So what: The stock has slumped in recent months on worries over its key Kaybob Montney oil pool expansion, but today’s operational update — currently flowing at an average oil rate of 438 Bbl/d, 0.9 MMcf/d of natural gas, and 104 Bbl/d of water — is quickly easing those concerns. The positive early results also suggest that the pool extends beyond the identified boundaries, giving investors plenty of good vibes over the stock’s upside as well.

Now what: Due to some plant outages in the Kaybob and Grande Prairie area, Trilogy’s third-quarter production will be reduced to roughly 31,000 Boe/d. “We expect the Company will resume normal production levels in the fourth quarter,” Trilogy said in the update. “The additional capital projects described above will not have a significant impact on the average annual production rate, as the new wells are expected to come on production late in the current year; however these additional wells are expected to increase the exit rate for the year.” Of course, with the stock flirting with its 52-week highs once again, that production increase might already be baked into the valuation.

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