When a top-level insider makes a large purchase in their own company, investors should take note. It’s not a stretch to say that these individuals are some of the most informed participants in the market.
Here, we are going to highlight a large purchase from a top-level insider at Noreco (NOR:NO). Noreco is a Norwegian company that focuses on oil and gas assets in the North Sea. It is the second-largest oil and gas producer in Denmark. It’s traded on the Oslo Stock Exchange and currently has a market capitalization of NOK 9.6 billion (approx. $925 million).
Insider buying at Noreco
Our insider transaction data shows on September 6, the Chairman of Noreco, Riulf Rustad, purchased 25,000 NOR shares at a price of NOK 352.14. This purchase cost the director around NOK 8.8 million (approx. $900,000) and increased his holding in the company by around 14%.
We think this insider purchase is interesting for a couple of reasons. Firstly, Mr. Rustad has spent a large amount of money on Noreco stock here. Our insider transaction data shows us he spent a similar amount of money on stock in July. This suggests to us he is very confident in the prospects of the business.
Secondly, the Chairman has been at the business since 2016 which means he is likely to know the business well. He has a strong track record investing in the oil and gas sector and in oil services companies and offshore assets. It would appear that he is able to identify investment opportunities when they arise.
Strong production figures
Noreco’s efforts to increase oil and gas production were successful during Q3 and led to an increase in output guidance.
A restimulation campaign on the Halfdan well reaped dividends and delivered approximately 2.0 mboepd of additional gas volumes. This increased Noreco’s gas weighting from 20% to 26% of total production. The benefit of the restimulation is expected to last until H2 2024.
As a result of this performance, full-year guidance was raised to 25.5-27.0 mboepd. The previous guidance was 24.5-26.5 mboepd. The revision upwards of production numbers is expected to have a large positive impact on cash generation.
It’s worth noting that Noreco capitalized on the strong gas prices and hedged a further 450,000 MWh of gas. These hedges cover the period up to the end of Winter 23/24.
“The addition of valuable gas production during Q3 has driven strong cash generation to date, and the revised forecasts we have published today show a significant enhancement of our pre-Tyra cashflow profile. The DUC operator continues to mature further planned workover activity, and we look forward to this continuing to deliver into 2023 and beyond,” commented Euan Shirlaw, Chief Executive Officer in Noreco.
Given this positive update, we see the insider buying at Noreco as bullish.