3 Energy Stocks With Recent Intensive Insider Buying

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 |  Includes: ECA, PDPYF, PGH
by: Markus Aarnio

Since my November 26, 2012, article titled "5 Natural Gas Stocks With Recent Insider Buying," the stocks that I featured in the article have performed as follows:

Company Price 11/23 Price 3/7 Change
CQP $21.13 $24.00 +13.6%
MPO $6.26 $8.16 +30.4%
SXL $50.58 $66.78 +32.0%
MWE $50.84 $58.00 +14.1%
BAS $10.15 $14.06 +38.5%
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In this article I will feature three additional energy stocks that have seen intensive insider buying during the last 30 days. Intensive insider buying can be defined by the following three criteria:

  1. The stock is purchased by three or more insiders within one month.
  2. The stock is sold by no insiders in the month of intensive purchasing.
  3. At least two purchasers increase their holdings by more than 10%.

1. Encana Corporation (NYSE:ECA) and its subsidiaries engage in the exploration for, development, production, and marketing of natural gas, oil and natural gas liquids in Canada and the United States.

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Insider buying by insider (last 30 days)

  • Terrence Hopwood purchased 10,000 shares on March 6, and currently holds 43,396 shares or less than 0.1% of the company. Terrence Hopwood is Executive Vice President, General Counsel.
  • Clayton Woitas purchased 10,000 shares on March 5, and currently holds 90,000 shares or less than 0.1% of the company. Clayton Woitas is Interim President, Chief Executive Officer and Director of the company.
  • Darrin Henke purchased 1,000 shares on February 19, and currently holds 8,294 shares or less than 0.1% of the company. Darrin Henke is an insider of the company.

Insider buying by calendar month

Here is a table of Encana's insider trading activity by calendar month.

Month Insider buying / shares Insider selling / shares
March 2013 20,000 0
February 2013 1,000 0
January 2013 0 0
December 2012 27,732 0
November 2012 0 0
October 2012 0 0
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The month of March 2013 has seen the most insider buying since December 2012.

Financials

The company reported the full-year 2012 financial results on February 21, with the following highlights:

Revenue $5.2 billion
Net loss $2.8 billion
Cash $3.2 billion
Debt $7.7 billion
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Competition

Encana's competitors include Apache Corp. (NYSE:APA), Chesapeake Energy Corporation (NYSE:CHK) and Talisman Energy (NYSE:TLM). Here is a table comparing these companies.

Company ECA APA CHK TLM Industry Average (Major Integrated Oil & Gas)
Market Cap: 13.46B 28.83B 12.71B 12.56B 129.00B
Employees: 4,193 N/A N/A N/A 62.00K
Qtrly Rev Growth (yoy): -0.35 0.04 0.30 -0.23 0.11
Revenue: 5.16B 17.08B 12.32B 7.31B 222.58B
Gross Margin: 0.52 0.81 0.42 0.63 0.44
EBITDA: 2.29B 12.30B 4.48B 3.64B 44.23B
Operating Margin: 0.05 0.41 0.14 0.16 0.28
Net Income: -2.79B 1.92B -940.00M 132.00M N/A
EPS: -3.80 4.92 -1.46 0.01 3.62
P/E: N/A 14.95 N/A 1,225.00 8.85
PEG (5 yr expected): 0.72 1.21 0.33 -2.01 0.87
P/S: 2.61 1.69 1.03 1.71 0.64
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Encana is trading above the industry average P/S ratio.

My analysis

There have been three different insiders buying the shares and there have not been any insiders selling the shares during the last 30 days. There are three analyst buy ratings, seven neutral ratings and five sell ratings with an average target price of $22.75. The stock is trading at a forward P/E ratio of 14.39 and has a dividend yield of 4.38%. I have a cautiously bullish bias for the stock currently based on the intensive insider buying.

2. Pengrowth Energy Corporation (NYSE:PGH) engages in the acquisition, exploration, development, and production of oil and natural gas reserves in Canada.

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Insider buying by insider (last 30 days)

  • James Causgrove purchased 4,000 shares on March 4, and currently holds 120,180 shares or less than 0.1% of the company. James Causgrove is Senior Vice President, Operations & Engineering.
  • Andrew Grasby purchased 2,000 shares on March 4, and currently controls 46,528 shares or less than 0.1% of the company. Andrew Grasby is Senior Vice President, General Counsel & Corporate Secretary.
  • Michael Parrett purchased 20,000 shares on March 5, and currently holds 24,325 shares or less than 0.1% of the company. Michael Parrett serves as a director of the company.
  • Barry Stewart purchased 50,000 shares on March 5, and currently holds 100,000 shares or less than 0.1% of the company. Barry Stewart serves as a director of the company.
  • Donald Stewart purchased 12,500 shares on March 6, and currently controls 39,203 shares or less than 0.1% of the company. Donald Stewart serves as a director of the company.
  • John Zaozirny purchased 35,000 shares on March 4, and currently holds 100,100 shares or less than 0.1% of the company. John Zaozirny is Independent Chairman of the Board.

Insider buying by calendar month

Here is a table of Pengrowth Energy's insider trading activity by calendar month.

Month Insider buying / shares Insider selling / shares
March 2013 123,500 0
February 2013 0 0
January 2013 0 0
December 2012 96,936 0
November 2012 127,820 0
October 2012 0 0
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The month of March 2013 has seen the most insider buying since November 2012.

Financials

The company reported the full-year 2012 financial results on March 1, with the following highlights:

Funds flow from operations $539 million
Net income $12.7 million
Average oil production 85,748 boe/d
Cash $2.7 million
Debt $1.8 billion
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Outlook

The company's guidance for 2013 is as follows:

Oil production 85,000 - 87,000 boe/d
Capital expenditures $770 million
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Competition

Pengrowth Energy's competitors include Canadian Natural Resources (NYSE:CNQ) and Encana Corporation. Here is a table comparing these companies.

Company PGH CNQ ECA Industry Average (Oil & Gas Drilling & Exploration)
Market Cap: 2.01B 33.72B 13.85B 1.87B
Employees: N/A 5,276 4,193 738.00
Qtrly Rev Growth (yoy): 0.28 0.08 -0.35 0.75
Revenue: 1.26B 15.40B 5.16B 1.12B
Gross Margin: 0.61 0.55 0.52 0.38
EBITDA: 655.97M 8.11B 2.29B 421.10M
Operating Margin: 0.05 0.25 0.05 0.11
Net Income: 12.93M 2.42B -2.79B N/A
EPS: 0.03 2.20 -3.80 N/A
P/E: 157.03 13.99 N/A 150.00
PEG (5 yr expected): N/A 1.56 0.72 0.51
P/S: 1.56 2.15 2.61 1.53
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Pengrowth Energy's P/S ratio is in line with the industry average.

My analysis

There have been six different insiders buying the shares and there have not been any insiders selling the shares during the last 30 days. There are five analyst buy ratings, four neutral ratings and zero sell ratings with an average target price of $10.50. The stock has a 9.89% dividend yield. Pengrowth's NAV of $8.61 per share, based on GLJ Petroleum Consultant's 2P reserves value, is well above Pengrowth's current share price. I believe the stock is a good pick below the Net Asset Value.

3. Painted Pony Petroleum (OTCPK:PDPYF) is a Canadian oil and gas exploration company.

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Insider buying by insider (last 30 days)

  • James Reimer purchased 10,000 shares on March 5, in the public market and 378 shares on February 26, pursuant to a purchase/ownership plan. James Reimer currently holds 23,094 shares or less than 0.1% of the company. James Reimer is Vice President, Exploration.
  • Edwin Hanbury purchased 10,400 shares on March 4, in the public market and 426 shares on February 26, pursuant to a purchase/ownership plan. Edwin Hanbury currently holds 23,329 shares or less than 0.1% of the company. Edwin Hanbury is Vice President, Engineering.
  • Patrick Ward purchased 602 shares on February 26, pursuant to a purchase/ownership plan. Patrick Ward currently holds 970,597 shares or 1.1% of the company. Patrick Ward is President, Chief Executive Officer and Director of the company.
  • Barry McNamara purchased 353 shares on February 26, pursuant to a purchase/ownership plan. Barry McNamara currently holds 66,724 shares or less than 0.1% of the company. Barry McNamara is Vice President, Corporate Development.
  • Bruce Hall purchased 374 shares on February 26, pursuant to a purchase/ownership plan. Bruce Hall currently holds 26,841 shares or less than 0.1% of the company. Bruce Hall is Vice President, Land.
  • Mary Axford purchased 308 shares on February 26, pursuant to a purchase/ownership plan. Mary Axford currently holds 56,756 shares or less than 0.1% of the company. Mary Axford is Controller of the company.
  • Joan Dunne purchased 490 shares on February 26, pursuant to a purchase/ownership plan. Joan Dunne currently holds 561,590 shares or 0.7% of the company. Joan Dunne is Vice President, Finance and Chief Financial Officer of the company.

Insider buying by calendar month

Here is a table of Painted Pony's insider trading activity by calendar month.

Month Insider buying / shares Insider selling / shares
March 2013 20,200 0
February 2013 5,700 0
January 2013 11,972 0
December 2012 67,007 0
November 2012 2,523 0
October 2012 2,023 247,000
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The month of March 2013 has seen the most insider buying since December 2012.

Financials

The company reported the third-quarter financial results on November 20, with the following highlights:

Revenue $16.9 million
Net loss $2.6 million
Cash $40.5 million
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On December 21, 2012, Painted Pony announced that it had closed its previously announced deal financing. Pursuant to the offering, the company issued a total of 16,997,000 common shares in the capital of the company, which included the full exercise of the over-allotment option granted to the underwriters of the offering. All of the common shares were issued at a price of $10.15 per common share for gross proceeds of $172,519,550. Subsequent to the closing of the offering, Painted Pony has 88,051,760 common shares issued and outstanding.

Outlook

The company continues to pursue the development and expansion of its Montney gas assets in northeastern British Columbia. In 2012, the company expects to complete drilling operations on a total of 11 (6.8 net) Montney wells. For 2013, the company has approved a capital budget of approximately $120 million, expected to be funded from cash flow and the existing credit facility. Approximately 80% of the budget has been allocated to Montney gas. During 2013, the company expects to participate in 11 (9.4 net) Montney wells. This proposed Montney program will include step-out drilling in the company's Cypress, northwest Blair and central Cameron blocks.

My analysis

The stock has a $23.5 price target from the Point and Figure chart. There have been seven different insiders buying the shares and there have not been any insiders selling the shares during the last 30 days. The executives and directors as a group own 4% of the company. The company's proved plus probable reserves are 191 mmboe. Painted Pony's field-estimated production for January 2013 averaged 8,100 boe/d (77% weighted to gas). I have a long position in the stock currently.

Disclosure: I am long OTCPK:PDPYF. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.