Executives Are Buying In, Even as Energy Stocks Tumble

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As oil prices have tumbled the past few weeks it seems everyone has an opinion. Some think we will tumble down below $50 a share while others think that prices will jump right back above $100 a barrel before too much time passes.

Oil and gas stocksWhile the pundits have been pondering the direction of oil prices, the price of energy stocks has absolutely collapsed. In just the last month the Market Vectors Oil Services ETF (OIH) has fallen by more than 20% and is down 35% in the past six months.

Investors have abandoned the sector at a rapid pace and we have seen some individual stocks tumble by 50% or more as oil prices plunged.

But there is one group of investors that is not fleeing as prices fall. The officers and directors of many energy and oil services companies have been cracking open their checkbooks. Apparently many of them believe that the shares of the companies they run are now too cheap not to buy.

Here are three companies whose executives are taking advantage of falling energy stocks:

Falling Energy Stocks: RPC, Inc.

Falling Energy Stocks: RPC, Inc.In the past three months the price of RPC, Inc. (RES) shares has tumbled by more than 40%. RPC provides services such as pressure pumping, coiled tubing, snubbing, nitrogen pumping, well control consulting and firefighting to the oil and gas industry. It also offers pipe inspection and management, as well as training services.

Sustained low oil prices would have a negative impact on drilling activity, which would hurt sales and profits at RES, but insiders clearly feel that this is reflected in the battered stock price.

Chairman of the Board Randall Rollins has purchased more than $8.2 million worth of RES stock in the past week, while fellow director Gary Rollins bought the same amount of RES stock on the open market.

Falling Energy Stocks: Diamond Offshore Drilling Inc

Falling Energy Stocks: Diamond Offshore Drilling IncDiamond Offshore Drilling Inc (DO) provides offshore drilling services to the oil and gas industry around the world. They have a fleet of 45 rigs that function in the ultra-deep water, deep water and mid-water segments of the offshore markets.

The stock has bounced off the lows but is still down 37% so far in 2014.

Loews Corporation (L), the conglomerate operated by the Tisch family, has a controlling stake in the company and used the recent weakness to increase its ownership. Lowes has bought more than $20 million worth of DO stock in December and more than $40 million in November.

Two members of the board have also been buying shares of drilling company in the past two weeks.

Falling Energy Stocks: WPX Energy Inc

Falling Energy Stocks: WPX Energy IncWPX Energy Inc (WPX) has been one of my favorite oil and gas stocks and I have now ridden the stock from a very nice gain all the way back down to a moderate loss in my position.

The independent oil and gas company operates in Piceance basin, Williston basin, San Juan basin, Appalachian basin and Powder River basin shale fields in the U.S. Although investors fear that sustained low oil and gas prices will reduce shale field output, insiders at WPX seem to think that the cuts won’t be as bad as some of the more pessimistic assumptions.

Three insiders, including CEO Richard Muncrief and CFO Kevin Vann, have been buying shares of WPX stock in the past week. Muncrief expressed great confidence in a recent news release, telling investors:

“We’re heading into 2015 reshaped, refocused and ready to grow margins, develop our highest returning assets and build the long-term value of the company.”

He backed his words with his cash and has been a buyer of WPX stock in November and December.

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Article printed from InvestorPlace Media, https://investorplace.com/2014/12/executives-buying-in-energy-stocks-res-do-wpx/.

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