Magellan Petroleum (MPET) Stock: Here's Why it's Up Big

Magellan Petroleum Corporation (NASDAQ: MPET)

Magellan Petroleum Corporation is having an incredibly strong day in the market today. As soon as the opening bell rang, the stock started skyrocketing toward the top. While it has definitely fallen off of the day’s highs, the stock is still well into the green and looks to be staying there. Below, we’ll talk about what we’re seeing from the stock, why, and what I’ll be watching for with regard to MPET ahead.

What We’re Seeing From MPET

As mentioned above, Magellan Petroleum Corporation has been having an incredibly strong trading session today. Following the opening bell, the stock found its way to the green quickly, where it continued to climb higher and higher. While the stock has fallen off of highs over the past few minutes, it looks like it will stay well into the green throughout the session. Currently (11:29), MPET is trading at $6.06 per share after a gain of $0.81 per share or 15.45% thus far today.

Why The Stock Is Heading Up

As soon as I noticed the gains on MPET, I had to start digging to see what was causing the movement. After all, other oil and energy stocks haven’t been off to a strong start today at all. So, this definitely isn’t industry wide movement. Nonetheless, after a quick search, the reason for the gains became clear. The company was the subject of a large equity investment.

Early this morning, it was announced that the company has received a multi-million dollar investment from GE Oil & Gas. In fact, Magellan Petroleum received a preferred equity investment from the company in the amount of $25 million. The investment came with an implied per share value of $5.94, which represents an incredible premium on this type of purchase.

In a statement, Meg Gentle, CEO at MPET, had the following to offer with regard to the large equity investment…

This investment represents another step forward in the development of Driftwood LNG, where we are working together with GE to design the lowest cost liquefaction for the global market. GE Oil & Gas has provided technology for LNG facilities worldwide for over 25 years and is a pioneer in innovation and a leader in reliability. We look forward to a long and beneficial partnership with the GE team.”

What I’ll Be Watching For Ahead

There’s no doubt in my mind that there are going to be opportunities surrounding MPET ahead. The equity investment announced today will give the company the capital it needs in order to expand further. However, that’s not the story I’ll be watching closest. At the end of the day, Magellan Petroleum is a company that is heavily seeded in the oil and gas sector, and let’s face it, that’s a sector that has been struggling. However, OPEC plans on an output cut, and has suggested that the finalized agreement for the output cut would be completed by no later than November 30th. As we get closer and closer to the deadline, the news surrounding this agreement is causing quite a bit of movement in the market. So, I’ll be watching the story closely as it develops. After all, this will likely play a larger role in movement in MPET and others in the oil and energy sector ahead.

What Do You Think?

Where do you think MPET is headed moving forward? Join the discussion in the comments below!