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Oil Companies See Massive Recent Insider Purchases

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Energy companies with significant recent insider purchases

Three major energy firms experienced insider purchases of their shares in early August. Diamond Offshore Drilling (DO), Exxon Mobil (XOM), and Occidental Petroleum (OXY) witnessed insider purchases worth approximately $4.9 million, $400,000, and $870,000, respectively.

Together, these firms constitute about 20% of the Energy Select Sector SPDR ETF (XLE) and 3% of the SPDR S&P Oil & Gas Exploration & Production ETF (XOP).

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Diamond Offshore Drilling expects boost in deepwater drilling

With oil prices remaining low, the short-term outlook is bleak for offshore deepwater drilling. Energy companies also tend to dislike costly deepwater projects given the current market conditions. The excessive supply has been adding to oil price woes. Diamond’s CEO, Marc Edwards, stated in the company’s recent earnings call that the probability of “green shoots” of a bounceback in oil prices seem to be low, assuming that today’s prevailing industry fundamentals continue.

However, Edwards added that deepwater production would remain a crucial part of global energy supply. Edwards also noted that the nature of the firm’s business is cyclical and with time, deepwater production could regain demand. This is possibly a reason that Loews Corp. purchased ~$4.8 million of the Diamond Offshore Drilling’s shares.

Occidental Petroleum sees great prospects at the Permian Basin

The Permian Basin is regarded as a highly productive oil region in the US, and Occidental Petroleum has significant assets in this basin. The Permian Resources business of the firm exhibited robust total production growth of 51% on a year-over-year basis in 2Q15. Also, oil production increased by 78% on a year-over-year basis.

Additionally, savings in capital expenditure are being redeployed into extra activity within the Permian Basin. The firm also has replaced contract employees with engineers as additional cost-cutting measures.

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