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Insiders Are Buying Condor Petroleum

July 30, 2014 | About:
Markus Aarnio

maarnio

2 followers

1 The Company

One oil company has seen intensive insider buying during the last 30 days. Intensive insider buying can be defined by the following three criteria:

  1. The stock is purchased by three or more insiders within one month.
  2. The stock is sold by no insiders in the month of intensive purchasing.
  3. At least two purchasers increase their holdings by more than 10%.

Condor Petroleum (CNPRF) engages in the acquisition, exploration, development, and production of oil in Kazakhstan.

Number of shares (March 31, 2014)

346,120,871

Number of options (March 31, 2014)

29,355,000

Fully diluted number of shares (March 31, 2014)

375,475,871

Share price

$0.31

Market cap

$107.3 million

Enterprise value

$34.0 million

P/S

28.7

P/B

0.6

Tickers

CNPRF,TSX:CPI

nimetön.png

(Source: Investor presentation)

1.1 History

Condor Petroleum was incorporated on October 20, 2006. The company had its IPO on April 12, 2011, raising C$80.0 million at C$1.40 per share.

1.2 Business Model

Condor’s mission is to increase stakeholder value by growing reserves, production and cash flow. The company’s strategies for achieving success are to:

  • Drill an inventory of high impact exploration prospects
  • Monetize existing oil discoveries
  • Acquire additional oil producing assets with exploration opportunities

1.3 Assets

Condor has a 100% interest in the exploration rights to the 3,777 square kilometer Zharkamys West 1 territory located in Kazakhstan’s Pre-Caspian basin.nimetön.png

(Source: Investor presentation)

Here is a table of Condor’s Probable plus Possible reserves.nimetön.png

(Source: Annual Information Form)

The pre-tax Net Present Value (NPV 10%) of these assets is $60.8 million.

2 Management

The CEO Donald Streu has over 25 years experience in the oil and gas industry including 22 years with Chevron Canada Resources working in Angola, Indonesia, Nigeria, Canada and the United States. Donald Streu has been CEO since August 2008. Collectively, Condor’s management team has over 120 years of industry experience.

nimetön.png

(Source: Investor presentation)

2.1 Insider Ownership

Condor’s directors and executive officers own 3.3% of the company.

Here is a table of Condor’s insider activity during the last 30 days.

Name

Title

Trade Date

Shares Purchased

Current Ownership

Increase InShares

John Burzynski

Director

July 9

250,000

1,475,759 shares

+20.4%

Norman Storm

Kazakhstan Managing Director

July 9

250,000

2,344,118 shares

+11.9%

Donald Streu

CEO

July 9

100,000

1,657,412 shares

+6.4%

There have been 600,000 shares purchased by insiders during the last 30 days. Two of these three insiders increased their holdings by more than 10%.

Here is a table of Condor’s insider activity by calendar month.

 

Insider buying / shares

Insider selling / shares

July 2014

600,000

0

June 2014

0

0

May 2014

200,000

0

April 2014

328,000

0

March 2014

0

0

February 2014

0

0

January 2014

0

0

December 2013

0

0

November 2013

0

0

October 2013

0

0

September 2013

0

718,359

August 2013

0

0

July 2013

0

0

June 2013

0

0

May 2013

0

0

April 2013

0

5,000,000

March 2013

0

0

February 2013

0

0

January 2013

166,000

0

There have been 1,294,000 shares purchased and there have been 5,718,359 shares sold by insiders since January 2013. The month of July 2014 has seen the most insider buying. There have not been any insider selling this year.

2.2 Compensation

Here is a table of the management’s compensation during the last three years.

nimetön.png

(Source: Management information circular)

The management’s total compensation has declined during the last three years.

3 Operating Summary

Here is a table of Condor’s annual oil production since 2011.

Year

Oil production

2011

196 boepd

2012

238 boepd

2013

291 bopd

The oil production has increased 48% since 2011.

4 Financial Summary

4.1 Current Situation

Condor reported the first-quarter financial results on May 14 with the following highlights:

Revenue

C$1.4 million

Net income

C$30.4 million

Cash

C$78.8 million

Debt

C$0

Production

164 bopd

The oil production decreased to an average of 164 bopd in the first quarter of 2014 compared to 559 bopd in the first quarter of 2013, due to Kazakhstan regulations limiting production during the exploration period.

On January 28, 2014, Condor completed the sale of its 66% participating interest in the Marsel territory for gross proceeds of $88.0 million.

4.2 Historical Developments

Here is a table of Condor’s revenue and earnings since 2011.

Year

2011

2012

2013

Revenue (C$ millions)

3.2

3.3

4.5

Net loss (C$ millions)

13.5

14.1

15.7

The revenue has grown 41% since 2011.

5 Shares

Here is a table of Condor’s number of shares since 2011.

Year

2011

2012

2013

Number of shares (millions)

247.3

346.1

346.1

Condor’s number of shares have grown 40% since 2011, but revenue has grown 41%.

6 Outlook

Condor is expecting oil production to increase in 2014 when Taskuduk West field is brought into commercial production and two Shoba development wells are brought into trial production. The company is currently negotiating a production contract for the Taskuduk West field, which is expected to be in place in the third quarter of 2014. nimetön.png

(Source: Investor presentation)

7 Risks

The three main risks are the price of oil, negative earnings, and country risk. Since independence in 1991, Kazakhstan has achieved significant results in its efforts to attract foreign investment. Most of that investment has been in the natural resources sector.

nimetön.png

(Source: Investor presentation)

Condor is also a penny stock.

sc.png

8 Conclusion

There have been three different insiders buying Condor and there have not been any insiders selling Condor during the last 30 days. The three insiders purchased their shares at C$0.34. I believe Condor could be a good pick below C$0.34 based on the intensive insider buying. Condor is currently trading at a P/B ratio of 0.6.

nimetön.png

(Source: Investor presentation)

Disclosure: The author has no positions in any stocks mentioned.

About the author:

maarnio
I have 15 years of investing experience. I have traded stocks, commodities and Forex markets.

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