Insider Buying

Tourmaline Oil insiders continue to buy stock despite share price strength

Tourmaline Oil Corp
(TOU:CN)
12 months:
+139.39%
Activity:
Bullish
Pattern:
Purchase from two insiders including CEO
News:
Q2 results
Tourmaline Oil Corp
(TOU:CN)
12 months:
+139.39%
Activity:
Bullish
Pattern:
Purchase from two insiders including CEO
News:
Q2 results

Insider buying can provide clues about a stock’s next move. Insiders sell company stock for many reasons. But they only buy stock for one reason – they expect it to go up.

In this report, we are going to highlight some interesting insider buying at Tourmaline Oil Corp (TOU:CN). Tourmaline is a Canadian crude oil and natural gas exploration and production company. The company, which began operations in 2008, is focused on long-term growth through an aggressive exploration, development, production, and acquisition program in the Western Canadian Sedimentary Basin. It’s listed on the Toronto Stock Exchange and currently has a market cap of CAD $24.9 billion.

Insider buying at Tourmaline Oil

Between August 2 and August 4, we observed three insider purchases at Tourmaline:

  • August 2 – Purchase of 5,000 shares at CAD $78.14 per share by Founder, Chairman, CEO, and President Mike Rose.
  • August 3 – Purchase of 1,600 shares at CAD $75.83 per share by Independent Director John Elick.
  • August 4 – Purchase of 5,000 shares at CAD $72.05 per share by Founder, Chairman, CEO, and President Mike Rose.

Combined, these insider purchases were worth around CAD $870,000.

Oil industry veterans

Both of these insiders have considerable experience in the oil industry.

Mr. Rose has been the Chairman, President, and CEO of Tourmaline since he founded the company in August 2008. Before this, he was Chairman, President, and CEO of Duvernay Oil Corp – which he founded and later sold in 2008 for $5.9 billion. Overall, he has nearly 40 years of experience in the oil and gas industry.

Meanwhile, Mr. Elick was previously Founder and CEO of Cinch Energy Corp between November 2001 and November 2009. Before this, he was Vice President of Land at Pan East Petroleum Corp – a public oil and natural gas company he co-founded. Prior to that, he spent 23 years at Amoco Canada Petroleum Company Ltd.

Given their experience, these insiders are likely to have a good understanding of Tourmaline’s prospects.

Special dividend

Tourmaline has a lot of momentum right now thanks to high energy prices.

For the second quarter of 2022, cash flow was a record $1.35 billion – a 137% increase over second quarter 2021 cash flow – while free cash flow was a record $1.1 billion. Net earnings amounted to $822.9 million, up 96% year on year.

On the back of this strong performance, the company paid down debt significantly, ending the period with net debt of $430.0 million, well below the long-term debt target of $1.0 to $1.2 billion. It also declared a special dividend of $2.00 per common share.

After the Q2 results, analysts at Atb Capital Markets raised their target price for the stock to CAD $90 from CAD $85. That implies upside of over 20% from current levels.

In light of this momentum, we see the insider buying here as a bullish indicator.

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