NEW YORK (TheStreet) -- Shares of Gran Tierra Energy (GTE) - Get Gran Tierra Energy Inc. Report are up 10.96% to $2.53 on heavy trading volume after oil prices soared to a one-month high on Tuesday, providing investors some respite from a prolonged selloff that rattled financial markets, the energy sector and oil dependent economies, the Wall Street Journal reports.
Brent rose 5.84% to $57.95 at 2:47 p.m. in New York. West Texas Intermediate was up 6.92% to $53.
Tuesday's rally came in response to a U.S. refinery strike, which pushed up prices for petroleum products on concerns that the refineries could shut down fuel production, the Journal said.
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One U.S. refinery is shutting while management takes control of operations at six others after union workers walked out of the plants when contract negotiations fell apart, Bloomberg reported.
Higher product prices are boosting crude-oil prices on the expectation that refineries may buy more crude to take advantage of better margins, the Journal added. However, the global crude market is still oversupplied, according to analysts, and the rally may not be sustainable, the Journal said.
Separately, the Calgary-based independent international energy company which owns oil and gas properties in South America said yesterday that oil reserves in Colombia and Brazil increased after producing 9.1 MMbbl (Working Interest) of oil in 2014, while Peru reserves would be adjusted downward following negative well results after year-end.
Notably, the company also said yesterday that the employment of its CEO Dana Coffield has been terminated. COO Duncan Nightingale was appointed interim president and CEO.
About 5.9 million shares changed hands by 3:03 p.m. in New York, compared to the average of 2.43 million shares.
TheStreet Ratings team rates GRAN TIERRA ENERGY INC as a Hold with a ratings score of C. TheStreet Ratings Team has this to say about their recommendation:
"We rate GRAN TIERRA ENERGY INC (GTE) a HOLD. The primary factors that have impacted our rating are mixed some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its increase in net income, largely solid financial position with reasonable debt levels by most measures and attractive valuation levels. However, as a counter to these strengths, we also find weaknesses including disappointing return on equity and a generally disappointing performance in the stock itself."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Oil, Gas & Consumable Fuels industry. The net income increased by 33.7% when compared to the same quarter one year prior, rising from $33.06 million to $44.18 million.
- GTE has no debt to speak of therefore resulting in a debt-to-equity ratio of zero, which we consider to be a relatively favorable sign. Along with this, the company maintains a quick ratio of 2.75, which clearly demonstrates the ability to cover short-term cash needs.
- Regardless of the drop in revenue, the company managed to outperform against the industry average of 11.8%. Since the same quarter one year prior, revenues slightly dropped by 5.4%. Weakness in the company's revenue seems to not be hurting the bottom line, shown by stable earnings per share.
- GTE's stock share price has done very poorly compared to where it was a year ago: Despite any rallies, the net result is that it is down by 71.20%, which is also worse than the performance of the S&P 500 Index. Naturally, the overall market trend is bound to be a significant factor. However, in one sense, the stock's sharp decline last year is a positive for future investors, making it cheaper (in proportion to its earnings over the past year) than most other stocks in its industry. But due to other concerns, we feel the stock is still not a good buy right now.
- Current return on equity is lower than its ROE from the same quarter one year prior. This is a clear sign of weakness within the company. In comparison to the other companies in the Oil, Gas & Consumable Fuels industry and the overall market, GRAN TIERRA ENERGY INC's return on equity is significantly below that of the industry average and is below that of the S&P 500.
- You can view the full analysis from the report here: GTE Ratings Report