Top executives at Canada's mid-cap oil and gas companies sent a bullish signal as commodity prices recently touched multi-year lows, according to Raymond James.
Calgary-based analyst Jeremy McCrea says open-market stock purchases by company insiders topped $8.9 million over the last 90 days, enough to give investors confidence at current prices.
"The Canadian oil and gas sector has seen plenty of volatility over the last few months, as commodity prices continue to swing," he wrote in a note to clients this week. "This high level of volatility harms confidence, especially for new investors looking at the sector."
"Despite some of the lowest commodity prices we've seen in the last few years, executives are showing optimism heading into Q2 results," McCrea added. "That . . . should help build investor confidence, especially as it relates to investing alongside management, the expected go-forward profitability, and ultimately, reassurance that there are no 'skeletons in the closet.'"
Tourmaline Oil (TOU.TO) CEO Michael Rose made the largest purchases within the sector, buying $1.6 million worth of stock at an average price of $58 per share, according to Raymond James. Baytex Energy (BTE.TO)(BTE) CEO Eric Greager bought $0.97 million in shares, and Whitecap Resources (WCP.TO) CEO Grant Fagerheim added $0.4 million in company stock. Overall, Tourmaline Oil, Baytex, and Freehold Royalties (FRU.TO) saw the most buying from insiders during the period analyzed by Raymond James.
Many of these companies and names were highly ranked in a similar report from McCrea in April, where insiders were found to have bought $28 million worth of stock in open-market purchases over a six-month period.
Aside from commodity-related volatility, McCrea says the recent dip in insider purchasing may be the result of pending merger-and-acquisition deals.
"We've seen many companies express a desire to consolidate (or sell), and the lack of buying could be an indication of 'blackout periods,'" he wrote.