By Siraj Sarwar
The founder of BP Capital, T. Boone Pickens, is one of the most well-known names in the business world. He started his career by founding Mesa Petroleum in 1956 and leading it through the twists and turns of approximately forty years while it shifted through various entity changes. Subsequently, after helping to fund ABP Capital, he took on prime responsibility for managing both the Energy and the Equity Funds. Today, he continues to market the Equity Fund to certain investors. The fund specifically focuses on the gas and oil sectors.
In this article, I look at T. Boone Pickens' latest significant buys. Unsurprisingly, all of his latest stocks are related to the energy sector. The latest picks are Marathon Oil Corp (MRO), National Oilwell Varco, Inc. (NOV), Occidental Petroleum Corporation (OXY), Range Resources Corporation (RRC) and Weatherford International Ltd. (WFT).
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Marathon Oil Corp is an integrated energy company with significant operations in North America, Africa and Europe. At the end of Q4, BP Capital initiated a position in Marathon Oil. The fund manager started a position in the company by purchasing 0.18 million shares. Marathon is ranked at 9 in Pickens' portfolio.
Marathon Oil has successfully completed its first full-year as an independent exploration and production company. The company has displayed domestic resource plays and continued to conduct operations in its base assets. Moreover, Marathon is looking to enter into new, high-potential exploration opportunities. Seeing this impressive achievement, BP Capital has initiated a large position in Marathon.
Marathon's year-to-date returns stand at 13%. Marathon's strong position in the leading U.S. resource plays together with a stable portfolio of assets allowed it to post incredible results. At the end of 2012, the company was able to report net income of $322 million. In addition, its solid operational performance allowed it to boost full-year upstream net production by 8 percent over the prior year.
I believe that the company will perform better in 2013 as it projects its upstream businesses. Production will increase by 6% to 8%. Marathon continues to be focused on higher-value liquids for potential growth in 2013.
National Oilwell Varco is an equipment supplier working in the drilling industries. The company has a track record of providing significant returns. Over the previous three years, the stock has grown from $40 to $68. National Oilwell also offers a regular quarterly dividend of $0.13. Above all, the company has solid financials and a strong revenue base enabling it to grow year over year.
Recently, it announced Q4 results with $668 million in net income. It was able to grow earnings by 9% over the previous quarter. 2012 remained record-breaking for the company. In addition, the company has a massive backlog of capital equipment orders totaling a record $11.86 billion, up 2% from the Q3 of 2012.
National Oilwell's impressive performance and fascinating future outlook attracted BP Capital's attention. BP Capital bought 94,139 shares for $6.4 million. Its fund manager constantly holds this stock through all the ups and downs in recent times. At present, the company constitutes 6.38% of the fund manager's portfolio.
Occidental Petroleum Corporation is a multinational organization that operates in the oil and gas, marketing, chemical and midstream and other segments. The company has shown substantial growth over the years. At the end of Q4, BP capital bought 94,139 shares for $6.4 million.
This is the first appearance of Occidental in BP's portfolio. Occidental is ranked at 12 in the fund manager's portfolio, and constitutes 4.97% of the portfolio. I believe it will be a beneficial purchase as the stock is significantly undervalued at present. The stock is trading at $82.28, though Morningstar.com has a fair value estimate of $107.
Furthermore, the company had an excellent year with $5.8 billion in core income. Higher liquid volumes, higher realized Natural Gas Liquids [NGL] and domestic gas prices and lower operating expenses led the company to post excellent results. Above all, Occidental Petroleum is making aggressive acquisition that could offer future production growth and improved reserves.
Range Resources Corporation is engaged in the exploration, development and acquisition of gas properties primarily. The company seeks to constantly increase production and reserves while maintaining one of the lowest cost business models in the industry.
With this business strategy, the company has a track record of growth. Additionally, it has strong inventory of projects with 1 million net acres in the Marcellus Shale Play. The company claims that it has the potential to grow its reserve base by 7 to 10 times on an annual basis.
Recently, Range announced full-year results with a 29% increase in total proved reserves to 6.5 Tcfe. In addition, the company's oil and NGL reserves increased by 64% compared to the previous year. Furthermore, it has non-GAAP cash flow of $1.54 per share, surpassing estimates by 18 cents.
The stock has been on a surge since 2009. It gained nearly 75.72%, over the previous five years. Range Resources remained a constant favorite of BP's managers. At the end of Q4, BP increased its stake in the company by 63%. BP holds 0.136 million share of Range Resources at present and ranked at 3rd place in its portfolio. This forms 8.48% of the fund manager's portfolio.
Weatherford International Ltd. is a global provider of products and services that span the drilling, evaluation, completion, production and intervention cycles of oil and natural gas wells. The company has shown exceptional growth in revenues and earnings over the years. Weatherford has a three-year average revenue growth rate of 10.6%.
Recently, it announced full-year record revenues of $4.058 billion. Additionally, it has solid cash flows at present. At the end of 2012, the company had generated above $200 million in operating cash flows. In addition, it was able to decrease its debt by $207 million due to strong cash flows.
At the end of Q4, BP initiated a position in Weatherford International by purchasing 0.422 million shares. This is the first appearance of Weatherford's in the BP portfolio. At present, the company is ranked 13 in the fund manager's portfolio.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
Business relationship disclosure: EfsInvestment is a team of analysts. This article was written by Siraj Sarwar, one of our equity researchers. We did not receive compensation for this article (other than from Seeking Alpha), and we have no business relationship with any company whose stock is mentioned in this article.