Insiders at more than 35 energy companies have bought around $55 million of their own stock in the past few months, even as traders bet a resolution to the Iran war could send oil prices and energy shares lower. Since late May, executives at Matador Resources, Vitesse Energy and HF Sinclair have been among the buyers, betting on a higher price floor for oil, security-driven demand outside the Middle East, and cheap valuations.
Insiders at over 35 energy companies have put around $55 million into their stocks in the past few months, even as conventional wisdom holds that resolving the Iran war would drop oil prices and energy shares quickly. The signal from executives running these companies points the other way: they are betting shares climb, not fall.
Executives are buying, not selling
At Matador Resources, the CEO and CFO have purchased over $1.5 million in stock. Since late May, a director at Vitesse Energy bought $1.6 million in shares, while the CEO of refiner HF Sinclair bought shares worth $1.3 million in mid-August. The buying has concentrated at smaller energy companies rather than giants like Chevron or ExxonMobil, but MarketWatch columnist Michael Brush, who has tracked insiders for two decades, says sectorwide buying like this is a bullish signal.
A higher price floor for oil
Rob Thummel of the Tortoise Energy Fund expects the war to end after the U.S. midterm elections, but sees a new price floor for West Texas Intermediate crude at $75 a barrel, roughly $10 above prewar levels, as traders price in geopolitical risk and countries rebuild oil inventories. The International Energy Agency has pushed its timeline for normalized Middle East energy flows into 2027 from late 2026 previously.
Ben Cook of the Hennessy Midstream Fund said WTI could trade up to $120 or $130 as the war drags on. According to Cook: "This is not a situation that looks like it is de-escalating in any way."
Natural gas in Europe and Asia recently traded around $27 per million British thermal units, compared with just under $3 in the U.S., a gap that Thummel says will keep benefiting U.S. companies that source gas domestically to sell into Europe and Asia.
Energy security reshapes where money flows
Value investor Bob Robotti argues energy security concerns now favor offshore and non-Middle East production, and his firm's equity strategy has outperformed the S&P 500 by 20.3 percentage points this year through the end of August. Canadian producers have drawn renewed interest too: Shell closed a deal this month to buy ARC Resources, its biggest purchase in a decade.
Valuations still lag the oil rally
Smaller energy companies trade at steep discounts to tech stocks, with low enterprise-value-to-EBITDA multiples of four or five and free-cash-flow yields of 10% to 15%, noted Ben Messier, director of investor relations at Vitesse Energy. Since the Iran war began on Feb. 28, the State Street SPDR S&P Oil & Gas Exploration and Production ETF is up 30% compared with a 55% advance for WTI, a gap insiders appear to be betting will close.
Source: MarketWatch
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