Insiders Are Buying Long Run Exploration

Nov.14.13 | About: Long Run (WFREF)

In this article, I will feature one energy company that has 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%.

Long Run Exploration (OTCPK:WFREF) is a Calgary-based intermediate oil company focused on light-oil development and exploration in Western Canada.

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Insider buying during the last 30 days

Here is a table of Long Run's insider-trading activity during the last 30 days by insider.

Name Title Trade Date Shares Purchased Current Ownership Increase In Shares
William Andrew CEO Nov 12 125,000 436,139 shares +40.2%
John Brussa Director Nov 11 50,000 629,841 shares +8.6%
Jana King VP Nov 12 4,000 4,000 shares from 0 to 4,000
Dale Miller President Nov 11 19,400 150,966 shares +14.7%
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There have been 198,400 shares purchased by insiders during the last 30 days.

Insider buying by calendar month

Here is a table of Long Run's insider-trading activity by calendar month.

Month Insider buying / shares Insider selling / shares
November 2013 198,400 0
October 2013 0 0
September 2013 0 0
August 2013 0 0
July 2013 0 0
June 2013 0 0
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There have been 198,400 shares purchased and there have been zero shares sold by insiders since June 2013. The month of November has seen all of the insider buying.

Financials

Long Run reported the third-quarter financial results on November 7 with the following highlights:

Revenue $129.9 million
Funds flow from operations $62.3 million
Net income $9.5 million
Net debt $378.5 million
Production 25,293 boe/d
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Outlook

Long Run anticipates paying an initial monthly dividend to shareholders of $0.0335 per share, with the first payment expected in February 2014, while delivering annual 2014 per share production growth of approximately 3 percent.

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(Source: November 2013 investor presentation)

Competition

Long Run's competitors include Canadian Oil Sands (OTCQX:COSWF), Vermilion Energy (NYSE:VET), and Penn West Petroleum (NYSE:PWE). Here is a picture comparing Long Run against its peer group.

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(Source: November 2013 investor presentation)

Long Run's 2014 estimated dividend payout ratio is below the peer average.

Here is a table of three of these competitors' insider-trading activities during the last six months.

Company Insider buying / shares Insider selling / shares
PWE 2,188,692 35,196
COSWF 16,002 0
VET 6,194 487,240
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Penn West has also seen intensive insider buying during the last 30 days.

Conclusion

There have been four different insiders buying Long Run and there have not been any insiders selling Long Run during the last 30 days. Three of these four insiders increased their holdings by more than 10%.

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(Source: November 2013 investor presentation)

Long Run's net asset value is $7.16 per share and the stock is currently trading at $5. I believe the stock could be a good pick from the current level based on the intensive insider buying.

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(Source: November 2013 investor presentation)

Disclosure: I have no positions in any stocks mentioned, but may initiate a long position in OTCPK:WFREF, PWE over the next 72 hours. 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.