Interactive Investor

Insider: a £1.6m share buying spree after price plunges

This FTSE 250 share has halved in value in less than 12 months and now sits at its lowest in two years, but directors think it’s time to buy. One of Aviva’s bosses is backing the insurer, too.

16th October 2023 09:10

by Graeme Evans from interactive investor

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    Energean (LSE:ENOG) shares worth £1.6 million have been bought by four of its directors after the UK-Israeli gas producer’s value slumped 20% in the wake of the recent Hamas attacks.

    Shares in the FTSE 250 firm, whose flagship Karish offshore project in Israel began production last October, rallied after the boardroom purchases were declared on Thursday afternoon.

    Buyers included long-time chief executive Mathios Rigas, who has overseen Energean’s rise from start-up to one of Europe’s largest exploration and production firms.

    Milestones have included last year’s first dividend payments at an annualised yield of 9% as Energean moved towards a pledge to distribute at least $1 billion by the end of 2025.

    The company, which listed on the London stock market in 2018, operates in eight countries across the Mediterranean and UK North Sea, but with a focus on the delivery of key gas development projects in Israel, Egypt and Italy.

    Production tripled in the first half of the year to 105 kboed (thousand barrel of oil equivalent a day), with two-thirds of this from Israel after the ramp up of Karish gas field operations.

    The Israel exposure also includes its Katlan licence, having submitted a field development plan to the country’s government in August.

    Shares were the hardest hit in the FTSE 350 index last Monday as traders reacted to events in the Middle East. The stock fell 18%, or 182p to 855p and, following a recovery on Tuesday, came under fresh pressure on Wednesday when they declined 10%, or 96p to 837.5p.

    Rigas last week made some of his £450,000 purchase for a price as low as 828p, as did finance director Panos Benos who declared an overall investment of a similar scale.

    Former JP Morgan investment banker Karen Simon, who has led the Energean board since 2019, picked up £463,000 worth of shares at 926p while non-executive director Stathis Topouzoglou spent £447,450.

    Their buying helped shore up City confidence as the shares recovered as far as 882p on Friday before falling back to close a turbulent week at 850p.

    Energean had been above 1,200p earlier in the year but weaker oil prices and last month’s trimming of full-year production guidance haven’t helped shares.

    The downgrade was blamed on Karish start-up issues that have since been overcome, with the company reiterating a target of 200 kboed, $2.5 billion revenues, $1.75 billion underlying earnings and a leverage ratio of 1.5 times in the second half of 2024.

    Over 75% of this near-term production target is underpinned by long-term gas contracts with floor pricing, ensuring cash flow predictability.

    In the wake of September's interim results, Peel Hunt highlighted a price target of 1550p and noted a projected 2024 dividend yield of 11.7% based on the share price at the time of 1,117p.

    US bank Jefferies last month upgraded Energean to a “buy” recommendation with a price target of 1,500p, adding that the company’s ramp up towards the 200 kboed target was now “meaningfully de-risked” following the progress at Karish.

    Heavy buying at FTSE 100 insurer

    Aviva (LSE:AV.) shares worth £242,000 have been bought by one of the insurer’s directors in the week that shares rallied to near their highest level since May.

    Mohit Joshi, who joined the board in December 2020 and is one of Aviva’s independent non-executive directors, made his purchase on Thursday at a price of 409p.

    The shares were as high as 467p in the spring only to fall to 366p last month amid the rise in global economic uncertainty. The fall came despite August’s 8% improvement in half-year operating profits as Aviva said it remained on track to exceed medium-term targets.

    Earlier this month Aviva paid shareholders a dividend of 11.1p, an increase of 8% on a year earlier under a pledge to distribute £915 million or 33.4p a share across 2023. This offers income-seekers a projected yield of around 8.6%.

    Aviva continues to have a strong following in the City, with Deutsche Bank responding to the results with a 475p target price and UBS reiterating 480p.

    The Swiss bank said last week: “Aviva remains our top UK life insurance pick given its diversified business model and attractive capital returns.”

    Its note also examined recent speculation that Aviva is in the sights of an overseas suitor.

    Modelling by the bank based on peer trading and previous transaction multiples suggested a takeover valuation range of 525p-680p a share.

    Aviva has also been linked to RSA’s UK personal lines and consumer business, a move that would strengthen its leading position in the UK non-life insurance market. Shares closed last week at 410.2p.

    These articles are provided for information purposes only.  Occasionally, an opinion about whether to buy or sell a specific investment may be provided by third parties.  The content is not intended to be a personal recommendation to buy or sell any financial instrument or product, or to adopt any investment strategy as it is not provided based on an assessment of your investing knowledge and experience, your financial situation or your investment objectives. The value of your investments, and the income derived from them, may go down as well as up. You may not get back all the money that you invest. The investments referred to in this article may not be suitable for all investors, and if in doubt, an investor should seek advice from a qualified investment adviser.

    Full performance can be found on the company or index summary page on the interactive investor website. Simply click on the company's or index name highlighted in the article.

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