Corporate insiders know their companies more intimately than anyone else. They also have access to real-time information that outsiders are unlikely to be aware of. If they’re buying stock, it’s generally a positive development.
Here, we are going to highlight an insider trade at Whiting Petroleum Corp (WLL:US). Whiting Petroleum Corp is an independent American oil, natural gas and natural gas liquids explorer, producer, and supplier headquartered in Denver, Colorado. The company’s main focus is oil, with petroleum accounting for nearly two thirds of its proven reserves. It’s traded on the New York Stock Exchange and currently has a market capitalization of $2.56 billion.
Whiting Petroleum Corp: Insider Buying
2iQ’s data shows that on November 12, a director of Whiting Petroleum Corp, Daniel Rice, bought 15,150 WLL shares at a price of $67.66 per share. This stock purchase cost the insider just over $1 million and increased his holding by 150%.
Mr. Rice has over a decade of experience within the energy sector. Previously, he was the CEO at Rice Energy Inc from 2013 until it was sold in 2017. After this, he became a Partner at Rice Investment Group in 2018. Currently, he serves as CEO for Rice Acquisition Corp, a publicly listed special purpose acquisition vehicle. This background means he is likely to have a good understanding of Whiting’s intrinsic value.
In more than doubling his stake Mr. Rice is showing that he is very optimistic that the upward momentum in the share price will continue. It’s worth noting that this is the first insider share purchase at the company for fourteen months and it is large in monetary terms. It indicates that the insider is confident the recovery at Whiting is not short lived and there is weight behind it.
Strong Cash Flow
Whiting Petroleum’s recent Q3 results showed that the company is benefiting from higher commodity prices.
Revenue jumped by 14% on Q2 to $401 million and the net income figure of $198 million was a significant improvement on the $61 million loss posted in Q2. Adjusted net income came in at $142 million, compared to $118 million achieved in the quarter before.
During the quarter, Whiting Petroleum generated significant free cash flow. And the company advised that if commodity prices remain stable, it expects to end the year with a strong balance sheet.
“The team continues to execute on our business plan as demonstrated by the substantial cash provided by operating activities of $190 million during the quarter and $526 million for the nine-month period,” said Lynn A. Peterson, the President and CEO. “The Company expects to continue to generate substantial free cash flow during the fourth quarter and end the year with no debt and positive cash on our balance sheet,” she added.
Having read the recent Q3 update at Whiting Petroleum, everything points to the recent insider trading as being very bullish. The company is performing strongly and Mr. Rice’s large investment in company stock suggests that he believes the momentum within the business will continue which will lead to a further re-rating in the shares.