The Bakken is one of the hottest oil and gas plays in the world. Great fortunes have already been made banking on the Bakken, which is located below parts of Montana, North Dakota and stretches into Canada. 

#-ad_banner-#The most notable fortune is that of Harold Hamm, the Chairman and CEO of Continental Resources, Inc. (NYSE: CLR). 

Over the last five years, shares of Continental Resources are up over 400%. With Harold Hamm owning 70% of Continental, he’s become the 40th richest person in the world with a net worth of $19 billion.

For those that missed the move in Continental Resources, there is still opportunity. One of the best plays on the Bakken shale that many investors have never heard of is Triangle Petroleum Corp. (NYSE: TPLM). 

Hamm sees the Bakken as a can’t miss opportunity. Years ago he predicted that the Bakken would produce 1 million barrels of oil per day. That goal will likely be hit this year.

With an estimated 24 billion barrels of recoverable oil in the Bakken region, this shale play could still be the opportunity of a lifetime. 

A unique situation in the Bakken
Triangle Petroleum is composed of three different companies focused on the Bakken in North Dakota and Montana: 

— Triangle USA Petroleum (TUSA) subsidiary explores for oil and gas in the Bakken. 

— RockPile Energy Services provides hydraulic fracturing services to TUSA and other companies operating in the Bakken. 

— Caliber Midstream transports oil, gas and water. 

Here’s why I think Triangle Petroleum is a solid play:

Triangle Petroleum values its RockPile subsidiary at $6.59 per share and its Caliber stake at $2.58. Together, they represent $9.17 a share in value, according to Triangle Petroleum. However, the entire company only trades at around $11.40 per share. This means that its TUSA business is valued at just $2.20 per share, or roughly $190 million.
 
Despite TUSA’s low valuation, it generated over 70%, or $160 million, of company-wide earnings before interest, taxes, depreciation and amortization for fiscal year 2014. 

The market appears to be grossly undervaluing Triangle Petroleum. The oil and gas company is likely trading at a large discount because it has a variety of businesses. One potential way to get the market to recognize the value of Triangle Petroleum is to spinoff or sell its non-core businesses. 

Bloomberg News reported in August that Triangle Petroleum may sell RockPile to unlock shareholder value. The report states that Triangle is interviewing investment banks to manage the sale process. If things go well with RockPile, Caliber Midstream could be next. 

RockPile would be an attractive fit for another oilfield services company. In the first quarter of this fiscal year, RockPile completed a total of 26 wells compared to only 10 wells in the prior fiscal year’s quarter. 

RockPile’s revenues grew to $61.4 million compared to $26.9 million in the first quarter of the 2014 fiscal year. RockPile has plenty of work ahead with a current backlog of about 31 wells awaiting completion.

Potential for a higher valuation 
By selling off these assets, Triangle Petroleum would then be a pure-play oil and gas explorer in the Bakken. There are only a few pure-play Bakken operators, meaning they have all their operations tied to the fast growing Bakken shale.

Whiting Petroleum Corp. (NYSE: WLL) is buying up one of the few pure-play Bakken operators, Kodiak Oil & Gas Corp. (NYSE: KOG), sending shares of Kodiak up 42% year-to-date. The combined company will be the largest Bakken oil producer.

Oasis Petroleum, Inc. (NYSE: OAS) is one of the other pure-plays Bakken operators. 

Triangle Corporation trades as the cheapest oil and gas explorer in the Bakken with a price-to-earnings (P/E) ratio of 12.51 compared to WLL’s 25.65 and OAS’s 12.67 P/E ratios. Wall Street expects earnings growth. Its P/E-to-growth rate (PEG) ratio is a mere 0.3 — anything below a 1.0 is considered to be growth at a reasonable price. 

There’s no reason this company should not trade more in-line with its peers. It’s hitting on all cylinders when it comes to production and its debt levels are more than manageable, with a debt-to-equity ratio below both Kodiak and Oasis. 

Triangle Petroleum posted fiscal first quarter earnings in June that showed investors that there’s a lot to like about its exploration business. Triangle Petroleum is now averaging 8,129 barrels of oil equivalent per day, which is a combination of its oil and liquid natural gas production. This is quite a jump for the company. Last year, Triangle was only averaging 2,714 barrels of oil equivalent per day.

Triangle Petroleum is also boosting its proved reserves. Triangle Petroleum ended its most recent quarter with proved reserves of 42,103 million barrels of oil equivalent. Last year, its proved reserves stood at only 16,050 million barrels of oil equivalent.

Between all of its subsidiaries, quarterly revenues grew from $34.3 million in the first quarter of the 2014 fiscal year to $99.8 million in the first quarter of this fiscal year. Net income grew from $5.2 million to $14.5 million.

Risks to Consider: With the price of oil coming down, Triangle might not be able to get the price it wants for its subsidiaries. Furthermore, with a lower oil price, Triangle is getting less money for each barrel of oil that it sells.

Action to take –> Buy shares of Triangle Petroleum as they look to be quite undervalued. Given it’s somewhat of a oil and gas conglomerate, the market is incorrectly valuing the company. And with a market cap of only $1 billion, Triangle Petroleum would also be an easy acquisition for one of the bigger Bakken companies or a new player looking to get a foothold into the lucrative Bakken formation.

This may not be the only shale oil play to prove lucrative. Forbes, Barron’s and almost every other financial media source has failed to discover what could be the world’s first $1 trillion boomtown situated in the center of massive new oil and gas deposits. Several oil and resource mining companies are poised to make billions from this under-the-radar hotspot, including one that’s up 1,500% in the past year. To get access to some of the stock names and ticker symbols I’m recommending, follow this link.