Despite a stock chart that could make even the most beleaguered and broken down TSX Venture investor cringe, a member of management and a director of Strategic Oil and Gas (SOG:TSXV) have recently bought shares in the struggling junior oil producer.
Since January 27th, Michael Graham, a company director, has purchased 1,393,500 shares between a high of $0.17 and a low of $0.11 per share, according to insidertracking.com.
Strategic Oil and Gas is off from a high above $1.40 per share in early 2013.
Gurpreet Sawhney, President and CEO of Strategic, also purchased 33,000 shares at $0.145 on February 27th; and 35,000 shares at $0.135 on March 2nd, according to insidertracking.com.
This show of confidence and support in Strategic’s market is noteworthy; unfortunately, it is not the first time company management has purchased a significant amount of shares in the market only to see its share price continue to decline.
In January of 2014, we published an article titled Strategic Oil & Gas Insiders Dig In, Buying $2.8 Million Worth of Stock. Below is a short excerpt:
“Strategic Oil & Gas (SOG:TSXV) witnessed a strong surge in insider buying late last week after its stock price dropped-off. The company’s insiders bought north of $2.8 million worth of stock Friday.
After opening at $0.66 per share Friday, Strategic Oil and Gas sold off to $0.41, before rebounding to close at 54 cents. Its shares were down 3.7% to $0.52 in late afternoon trading Monday.
More than $6.11 million worth of stock traded Friday, with insiders buying close to half the shares sold (in dollar value). This may be viewed as a show of faith and confidence by insiders of Strategic Oil & Gas.”
Click here to read more.
At the time of that article, Strategic’s 52-week high was $1.45 per share, which it hit in early 2013.
Currently, its 52-week high is $0.495 per share, which it hit on April 24, 2014, not much higher than where insiders did the majority of that buying in January 2014.
Later that year, in September of 2014, there was another significant surge in insider buying. We followed up with another article titled Insider buying in Strategic Oil explodes after $1.9 million purchased. Below is a short excerpt:
“Insiders bought $1.9 million worth or 5,138,700 shares of Strategic Oil & Gas Tuesday.
The insider buying took place on September 2nd, a day that saw 6.3 million shares trade hands. September 2nd was the most liquid day in the company’s market in over a month and came following news announcing new production targets. The stock traded in a range between $0.37 and $0.40 per share that day.
Strategic Oil’s key asset is its Muskeg play, located in Northwestern Alberta. Strategic has drilled 12 horizontal wells in the play to date and boasts 400 potential development locations. Muskeg is a huge reason the company has a stated goal of exiting the year at 4,600 boe/d.”
Click here to read more.
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Graham buys as Strategic Oil and Gas hits 52-week low
As mentioned above, Michael Graham’s purchases, although just a director of Strategic, are interesting.
Graham most recently held the position of Executive Vice President & President Canadian Division with EnCana Corporation until February 2012.
Mr. Graham has held various executive and management positions with Alberta Energy Company, Amber Energy Inc. and EnCana Corporation.
He has also served as a member of the Board of Governors for the Business Council of British Columbia, and the Canadian Association of Petroleum Producers.
Graham has purchased approximately 600,000 shares in Strategic Oil and Gas since April 6th, according toinsidertracking.com.
Strategic boasts having a land position of 500,000 acres in Canada.
Despite Strategic’s weak share price performance over the past few years, the company boasts being in“commercial stage development of a world class asset with 1 billion barrels of light oil resource” on itswebsite.
The company put out its Year-End 2014 Financial and Operating Results on April 2nd. It reported that,
“Production increased 38 percent from 2,847 boed for the three months ended December 31, 2013 to 3,925 boed for the current quarter, primarily due to the Company’s successful Muskeg drilling program at Marlowe.”
The company also reported that, “Funds from operations decreased 29 percent from $17.2 million in 2013 to $12.3 million in 2014 as higher revenues due to increased production levels were more than offset by increases in realized losses on risk management contracts and operating costs.”
Click here to read all the details from April 2nd’s press release.
Strategic Oil and Gas reacts to sub-$50 oil prices
Like many junior and senior oil producers operating at or near a loss, Strategic Oil and Gas made the difficult, but prudent decision to stop the winter Muskeg drilling program in order to preserve capital.
The Company took further measures to weather the storm by reducing its office and field staff by approximately 35% in order to remain competitive.
Strategic reported that, “Staff reductions were primarily related to the suspension of operations at Bistcho, realignment of the management team structure and the reduction in budgeted capital spending in 2015 compared to previous years.”
Futhermore,
“The Company anticipates being in violation of the working capital covenant of its $60 million credit facility as at March 31, 2015. Strategic is working proactively with its lenders regarding the facility and the covenants. In order to address the working capital violation and obtain the financial flexibility required to continue the development program at Marlowe when commodity prices improve, the Company is evaluating measures such as asset sales, other third party funding alternatives and elimination of all non-critical capital spending programs.”
With oil prices showing some resilience over the past few weeks, investors, such as company insider Michael Graham, are hoping the commodity continues to strengthen and that brighter days lie ahead for Strategic Oil and Gas.
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