By Abeera Manzoor (Chartered Accountant)
Famous energy entrepreneur T. Boone Pickens is responsible for the formulation of the futures investment strategy for BP Capital Management. T. Boone Pickens is not an average hedge fund manager. Pickens is an oilman turned fund manager. With a total market value of $60 million, down from $102 million past quarter, BP Capital manages one of the world's most successful energy-oriented investment funds. Pickens regularly utilizes his experience in the oil and gas industry in the assessment of energy sector themes and potential equity investments.
In this article, I'll take a look at Pickens' latest and most significant additions to his current holdings. Unsurprisingly, all of his significant additions are related to the energy sector. Pioneer Natural Resources Co (NYSE:PXD), Anadarko Petroleum Corporation (NYSE:APC) and Halliburton Company (NYSE:HAL) are the three main companies in which he continues to show confidence.
Percent of Portfolio
Pioneer Natural Resources Co.
Anadarko Petroleum Corporation
How Pioneer Natural Resources is an Attractive Investment
Pioneer Natural Resources is an independent oil and gas exploration and production company with operations in the United States. When recession hit the U.S. natural gas and oil markets in 2008, Pioneer Natural Resources intelligently headed for cover. In this clever bid, the company reduced its rig count to almost zero and increased capital spending by 70% with the intention of avoiding the double whammy of high, sticky service costs and low commodity prices.
Since that time, Pioneer has shifted its attention to its domestic liquids-rich assets, including the Eagle Ford, the Permian Basin and the Barnett Combo. Pioneer's decision to stick with its domestic recourses with a low-risk, high-margin led it to deliver profitable, double-digit production and reserve growth. As a result, in the past three years, Pioneer's revenue growth is standing at 33.8% when the industry average is at negative 1.8%. This decision has garnered strong favor among investors which can be seen in an amazing price appreciation of 785.2% in the past five years alone.
Pickens is also bullish on this company's ability to grow production and reserves. At the end of the recent quarter, Pioneer stands at first place in the Pickens portfolio. Indeed, Pickens has increased his holdings in this company from 4.19% of the portfolio to 12.57% by purchasing an additional 10,466 shares.
How Anadarko Petroleum is a Safe Investment
Anadarko Petroleum is engaged in the exploration and production of oil and natural gas. The company's three operating segments are: oil and gas exploration and production, midstream and marketing. Anadarko boasts a diverse collection of offshore and onshore assets all over the world, and with its low-cost base to fund capital expenditures, the company is well set to increase reserves and production over the next few years.
During Q3, Anadarko announced the $2.64 billion monetization of a portion of its working interest in Mozambique. Further, more recently, it announced a strategic acreage exchange in the Wattenberg field that is anticipated to enhance its operating efficiencies and concentrate its core acreage position near its operated infrastructure. In addition, the company continues to expand its ownership position by more than doubling working interest in the Coronado discovery in the emerging Shenandoah Basin.
With this diverse collection of offshore and onshore assets, Anadarko has been generating strong top and bottom line growth over the past several years. At the end of the recent quarter, the company has generated revenues of $3.85 billion, an increase of 15.6% over the past year quarter. Anadarko's solid results are driven chiefly by strong production growth that convinced Pickens to further increase his stake in this company with an additional purchase of 5,425 shares, which increased his holding in Anadarko from 4.60% of his portfolio to 9.28%.
How Halliburton is a Safe Investment
Halliburton Company is a provider of services and products to the energy industry, related to the exploration, development and production of oil and natural gas. Both Halliburton's Drilling and Evaluation and Completion and Production divisions set record quarterly revenues, with its Baroid, Completion Tools, Drill Bits and Testing product lines. The company's worldwide business continues to generate strong growth. On a year-to-date basis, its Eastern Hemisphere growth continues to lead in its peer group. Its Eastern Hemisphere revenue and adjusted operating income increased by 17% and 30% at the end of recent quarter.
In Latin America, Halliburton's revenues increased 6% sequentially and adjusted operating income increased by 57%. Despite severe revenue and operational disruptions from the Colorado floods, its North America business delivered 2% sequential revenue growth. Internationally, the company continues to expand its portfolio in mature, deepwater and unconventional fields.
Halliburton's strong financial performance is also reflected in its share price. Over the past year, shares prices surged from around $32/share to $52/share at the time of writing this article. Its forward PE of 12.7 offers a steady upside potential. Also, Halliburton recently increased its dividends by 39% in the first quarter and 20% in the third quarter, and it is working on a buyback program. I believe both dividend and buyback will positively impact its share price. Dividends and buybacks reflect this company's growing confidence in the strength of its business outlook, as does Pickens' increased interest.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.