Seeking Alpha
Long/short equity, insider ownership
Profile| Send Message| ()  

The Energy Select Sector SPDR ETF (XLE) was trading as low as $37.40 in March 2009. The index is currently trading at $83.00 or 121.9% above the low made in March 2009.

(click to enlarge)

In this article, I will feature two 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. Pembina Pipeline Corporation (PBA) provides transportation and midstream services for the energy industry in North America.

(click to enlarge)

Insider buying by insider (last 30 days)

  • Grant Billing purchased 80,000 preferred shares on July 26, pursuant to a public offering. Grant Billing serves as a director of the company.
  • Randall Findlay purchased 5,000 preferred shares on July 26, pursuant to a public offering. Randall Findlay serves as a director of the company.
  • Michael Hantzsch purchased 500 preferred shares on July 26, pursuant to a public offering. Michael Hantzsch is Vice President, Oil Sands & Heavy Oil.
  • Jennifer Harker purchased 1,000 preferred shares on July 26, pursuant to a public offering. Jennifer Harker is a senior officer of the company.

Insider buying by calendar month

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

MonthInsider buying / sharesInsider selling / shares
July 201386,5000
June 201300
May 20133700
April 201300
March 201384,3120

There have been 171,182 shares purchased and there have been zero shares sold by the insiders since March 1.

Financials

The company reported the first-quarter financial results on May 9, with the following highlights:

Revenue$1.3 billion
Net income$90.5 million
Net debt$2.2 billion

Competition

Here is a table comparing Pembina Pipeline to the industry leaders.

PBA vs. Industry Leaders
StatisticIndustry LeaderPBAPBA Rank
Market CapitalizationPETRONET.BO89.89B9.65B21 / 61
P/E RatioWGP641.1331.7323 / 61
PEG Ratio (ttm, 5 yr expected)OKS461.40-8.8839 / 61
Revenue Growth (Qtrly YoY)ETP720.40%170.40%3 / 61
EPS Growth (Qtrly YoY)MCR.V151.00%57.90%5 / 61
Long-Term Growth Rate (5 yr)WES51.30%-3.90%N/A
Return on EquityMCR.V62.90%10.10%30 / 61
Long-Term Debt/Equity 48.027N/A
Dividend Yield (annual)CHKR17.00%5.00%23 / 61

Pembina Pipeline ranks 21/61 in the market capitalization.

My analysis

There have been four different insiders buying the shares and there have not been any insiders selling the shares during the past 30 days. There are two analyst buy ratings, one neutral rating and zero sell ratings with an average target price of $36.00. The stock is trading at a P/E ratio of 31.67 and a forward P/E ratio of 29.86. The company has a book value of $15.40 per share and the stock has a dividend yield of 4.98%. The 200-day moving average is currently at $29.43, which could be a good entry point for the stock.

2. Surge Energy (OTC:ZPTAF), an oil and gas company, explores for, develops, produces, and markets petroleum and natural gas reserves primarily in Western Canada and the Northern United States.

(click to enlarge)

Insider buying by insider (last 30 days)

  • Daniel Brown purchased 10,500 shares on July 3, pursuant to a bought deal financing. Daniel Brown currently holds 203,572 shares or 0.2% of the company. Daniel Brown is Chief Operating Officer of the company.
  • Murray Bye purchased 10,000 shares on July 3, pursuant to a bought deal financing. Murray Bye currently holds 55,551 shares or less than 0.1% of the company. Murray Bye is Vice President Production.
  • Paul Colborne purchased 117,476 shares on July 3-17, and currently controls 1,372,556 shares or 1.1% of the company. Paul Colborne is President & Chief Executive Officer of the company.
  • Margaret Elekes purchased 9,045 shares on July 3, pursuant to a bought deal financing. Margaret Elekes currently controls 85,173 shares or less than 0.1% of the company. Margaret Elekes is Vice President Land.
  • Robert Leach purchased 3,900 shares on July 3, pursuant to a bought deal financing. Robert Leach currently holds 101,058 shares or less than 0.1% of the company. Robert Leach serves as a director of the company.
  • Maxwell Lof purchased 20,400 shares on July 3, pursuant to a bought deal financing. Maxwell Lof currently controls 285,183 shares or 0.2% of the company. Maxwell Lof is Chief Financial Officer of the company.
  • Keith Macdonald purchased 4,000 shares on July 3, pursuant to a bought deal financing. Keith Macdonald currently controls 64,745 shares or less than 0.1% of the company. Keith Macdonald serves as a director of the company.
  • Dan O'Neil purchased 15,201 shares on July 3, pursuant to a bought deal financing. Dan O'Neil currently controls 173,524 shares or 0.1% of the company. Dan O'Neil serves as a director of the company.
  • Tee Ong purchased 20,001 shares on July 3, pursuant to a bought deal financing. Tee Ong currently holds 37,759 shares or less than 0.1% of the company. Tee Ong is Vice President Engineering.
  • James Pasieka purchased 29,867 shares on July 3, pursuant to a bought deal financing. James Pasieka currently holds 189,601 shares or 0.2% of the company. James Pasieka serves as a director of the company.

Insider buying by calendar month

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

MonthInsider buying / sharesInsider selling / shares
July 2013240,3900
June 2013772,3100
May 201300
April 201300
March 20138,8500
February 201300
January 2013310,5000

There have been 1,332,050 shares purchased and there have been zero shares sold by the insiders this year.

Financials

The company reported the first-quarter financial results on May 10, with the following highlights:

Revenue$53.6 million
Funds from operations [FFO]$25.2 million
Net loss$1.4 million
Net debt$234.8 million
Oil production9,636 boe/d

News

On July 3 Surge Energy closed the $240 million acquisition of an elite, operated, crude oil producing asset in the southwest area of Saskatchewan.

Outlook

As a result of the recent continued successful drilling results at Valhalla, and the two new Sparky oil pool discoveries at Silver, Surge now anticipates that the company will exceed management's estimated 2013 production exit rate of 12,000 boepd (78% Oil/NGLs).

(click to enlarge)

Competition

The oil and natural gas industry is competitive in all its phases. Surge Energy competes with numerous other participants in the search for, and the acquisition of, oil and natural gas properties and in the marketing of oil and natural gas. Surge Energy's competitors include resource companies which have greater financial resources, staff and facilities than those of Surge Energy. Competitive factors in the distribution and marketing of oil and natural gas include price and methods and reliability of delivery. Surge Energy believes that its competitive position is equivalent to that of other oil and gas issuers of similar size and at a similar stage of development.

(click to enlarge)

My analysis

There have been 10 different insiders buying the shares and there have not been any insiders selling the shares during the last 30 days. The stock has a dividend yield of 7.5% and the company has a book value of $5.04 per share. I believe the stock could be a good pick at the book value. At year-end 2012, Surge's independent engineering report provided an estimate net asset value of $8.21 per basic share, before tax, based on proved plus probable reserves [PV10].

Source: 2 Energy Stocks With Recent Intensive Insider Buying