3 Energy Stocks Insiders Are Buying

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Includes: EGY, PDCE, TRGP
by: The Insiders Forum
Summary

The energy sector has been volatile, thanks to escalating sanctions on Iran, Venezuela's collapse, as well as worries about slowing global growth.

There has been some significant insider buying in many stocks in this sector in recent weeks.

Below, we examine three energy stocks with recent and notable insider buying.

Oil may run out, liquidity may dry up, but as long as ink flows freely, the next chapter of Life will continue to be written.” - Alex Morritt, Impromptu Scribe

It certainly has been an interesting few months in the energy markets. Escalating sanctions on Iran, turmoil in Libya, and the imploding economy of Venezuela have taken supply out of the market. Meanwhile, the U.S. Shale Boom continues to increase the record production from this country coming to market. We also have increasing worries about slowing global growth as well as new tariffs from both the U.S. and China over the past week as an erstwhile trade deal falls apart.

Interestingly, despite the volatility of the energy markets, we are seeing some notable insider buying in some domestic energy names. Here are three that stand out.

Source: Company Presentation

Let's start with PDC Energy (NASDAQ:PDCE). The fast-growing independent E&P concern has an approximate $2.5 billion market cap currently. Its production acreage is primarily located in the Wattenberg field in Colorado and the Delaware Basin in Texas.

Source: Company Presentation

As can be seen above, the company produces oil, natural gas, and natural gas liquids. The company recently has drawn the ire of activist investor Kimmeridge Energy Management who calls PDC's board 'asleep at the wheel' and negligent in creating adequate shareholder value.

The company's recent Q1 results posted to start May came in light on both the top and the bottom consensus. At least one director seems to see value in the shares at current trading levels as he bought just under $375,000 of stock on May 10th. This is the first insider buy I can find in these shares in over a half dozen years. Imperial Capital reiterated its Buy rating on PDCE two days after recent earnings results and upped its price target two bucks a share to $68.

Next up is Targa Resources (TRGP). A director scooped up nearly $2 million in new equity on May 10th in separate transactions. It was the first insider purchases since November of last year at the company when a different director bought 2,200 shares in the high $40s. Before that, one has to go back to 2011 to find an insider purchase at the company.

On May 7th, the company reported Q1 results that came in under expectations as the firm posted losses. Management did reaffirm fully year guidance, however. It has been a bit of a wild ride for shareholders in 2019 in this Houston-based midstream operator.

Source: Company Presentation

In the first quarter, the operating margin from the company's Gathering & Processing segment rose $8.2 million as volumes increased. Stifel Nicolaus is the only analyst firm that I can find that has 'chimed in' since Q1 earnings were announced. They reiterated their Buy rating on May 8th, but lowered their price target two bucks a share to $47. It should also be noted that the shares yield nearly nine percent at current trading levels.

Finally, we have VAALCO Energy (EGY). While the company is based in Houston, its productive capacity is all based offshore of West Africa. It currently has a dozen producing wells in the Etame Marin field.

Source: Company Presentation

Above is how the company recently described itself. As can be seen below, the company has done little for shareholders over the past quarter century.

There have been some small insider purchases for the first time in over two years recently. A director bought over $165,000 in shares on May 14th. The same date, the CEO added nearly $10K to his holdings, and the CFO increased her holdings by nearly $15,000. The company has extremely sparse coverage on the street as I can find no analyst ratings on this stock despite an approximate $100 million market cap. VAALCO was covered earlier this week in an article by another SA contributor, however.

And, those are three energy names with recent and notable insider purchases. I offer them up for further due diligence and possible investment selection.

Taking away coffee from Americans is like taking away oil from the motors.” - M.F. Moonzajer

Bret Jensen is the Founder and author of articles on The Biotech Forum, The Busted IPO Forum, and The Insiders Forum.

Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within 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.