Devon plans to spend some $6.4 billion to $7 billion in CapEx in 2013, with a large part directed toward placing the company as an onshore exploration and exploration company. As well, Devon has a joint venture with Kirby Oil Sands that will help boost its oil sands production by an annualized 20% to 2020.
Going into the second quarter, Devon had an impressive 45 hedge funds long the stock. This includes its top hedge fund owner First Eagle Investment Management, with a position of close to $449 million and making up 1.5% of its portfolio (check out First Eagle’s high yielders).
Occidental Petroleum Corporation (NYSE:OXY) ranks fifth in Pickens’ portfolio and accounts for 6.1% of its portfolio. Occidental is one of the largest oil and gas companies in the U.S.
Occidental managed to grow oil/gas production by 5% in 2012, and 2013 production is expected to be up 6%. This growth should be driven by Occidental’s strong position in the Permian Basin and California.
Occidental Petroleum Corporation (NYSE:OXY) also plans to reduce costs and improve margins by reducing production costs by 7% in 2013 and a total target of a 15% decline from 2012. Part of this includes reducing CapEx and rig activity. However, Occidental still expects 5% to 8% total production growth per year through 2014 thanks to improvements in drilling efficiencies.
The bottom line
Pickens loves oil and gas, but why? Well S&P expects the U.S. exploration and production companies to grow oil and liquids production by 18% in 2013, where higher-margin oil is expected to boost industry cash flow by 8% in 2013.
Of Pickens’ picks, Apache and Occidental are the best. Apache Corporation (NYSE:APA) has a very robust liquids portfolio, and while the other Pickens picks are looking to shift toward the higher margin business, Apache is already there. Goodrich’s earnings growth outlook is relatively unimpressive, while Devon is making turning toward oil sands, which can be lower-margin. I do like Pioneer Natural Resources (NYSE:PXD), given its presence in a couple of the top shale plays in the U.S. Lastly, Occidental is planning to reduce costs while boosting production. Now that’s a good combo.
Marshall Hargrave has no position in any stocks mentioned. The Motley Fool owns shares of Apache and Devon Energy. Marshall is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.
The article Billionaire T. Boone Pickens’ Energy Portfolio originally appeared on Fool.com and is written by Marshall Hargrave.
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