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:
- The stock is purchased by three or more insiders within one month.
- The stock is sold by no insiders in the month of intensive purchasing.
- At least two purchasers increase their holdings by more than 10%.
Condor Petroleum (CNPRF, Financial) 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 |
(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.
(Source: Investor presentation)
Here is a table of Condor’s Probable plus Possible reserves.
(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.
(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.
| Ă‚ | 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.
(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.
(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.
(Source: Investor presentation)
Condor is also a penny stock.
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.
(Source: Investor presentation)
Disclosure: The author has no positions in any stocks mentioned.
