The Senex Energy Ltd (ASX: SXY) share price took a tumble yesterday, but insiders have been keen to grab more shares in Senex Energy over the last two weeks.
Is this a bullish sign for the growing gas producer?
Four different directors have added to their positions over the last two weeks with on-market acquisitions after the release of the company's quarterly report for the final three months of the financial year.
|
Name |
Date of change |
Number acquired |
Position |
|
Ralph Craven |
01 August |
+12,000 |
Independent Non-executive Director |
|
Ian Davies |
01 August |
+100,000 |
Managing Director and CEO |
|
Trevor Bourne |
30 July |
+100,000 |
Chairman, Independent Non-executive Director |
|
John Warburton |
30 July |
+72,000 |
Independent Non-executive Director |
|
Ralph Craven |
26 July |
+50,000 |
Independent Non-executive Director |
|
Ian Davies |
24 July |
+ 114,000 |
Managing Director and CEO |
Source: company releases
What's changed?
Although sales revenue in the final three months of the financial year came in below last year, sales revenue for the full year came in at $94 million, up a healthy 34% from FY18.
The share price didn't move much on the news, but Senex has increasingly been painting the picture, through announcements and presentations, that the business is positioned to start rapidly accelerating gas production in the next two years.
A material increase to the company's cash flows would be well received by investors and could lead to a re-rating of Senex's share price.
"Step change" coming
Look, I have a fondness for Senex Energy. Although I got caught out by the falling share price when the price of oil collapsed several years back, I think the business was artfully managed through that period.
The company's deals-based approach to financing its capital hungry development program, rather than repeatedly rattling the tin at shareholders for cash, is a thing to behold.
Sure, profitability at times feels like a vision that is always just slightly out of reach, but I think that is a reflection of the time and investment it takes to evolve from an 'exploration' to 'production' stage company.
There is no doubt that the business is executing and the company has stated that "production, earnings and cash flow step change [is] coming in FY21."
Foolish takeaway
The operational progress and growth in revenue achieved in FY19 certainly indicates a strengthening of prospects looking forward and personally I would own shares in Senex over fellow producer Santos Ltd (ASX: STO) today.
If Senex can continue to manage the risks around cash burn to get production humming, the directors who bought shares could be rewarded for their optimism.
