Russell Lucas’ Lucas Capital Management is bound to profit greatly from its stake in Whiting Petroleum Corp (NYSE:WLL), one of its top picks at the end of 2014. Whiting Petroleum Corp shares soared today, climbing more than 10%, to $37.71 per share during afternoon trading. The company experienced heavy trading due to reported rumors that it is looking for a possible buyer. The decline in oil prices has taken its toll on Whiting Petroleum Corp, which has seen its share price drop from a 52-week high of $92.92 in August, to $24.13 per share in December.
During the fourth quarter, Lucas Capital Management doubled its stake in Whiting Petroleum Corp (NYSE:WLL), acquiring 132,500 shares of the stock. According to its latest 13F filing, the investment firm’s position in the company amounts to 257,500 shares, valued at around $8.5 million, and accounting for 3.16% of its equity portfolio. If the rumors regarding the buyout are confirmed, Lucas Capital Management could profit significantly from its stake in Whiting Petroleum Corp. Although the company has been struggling as of late, it should receive some great offers, since it owns very valuable assets in the Bakken Shale formation in North Dakota.
In addition to dealing with depressed oil prices, the company’s acquisition of Kodiak Oil & Gas for $3.8 billion last year, generated additional debt of around $2 billion. Although the purchase allowed Whiting Petroleum Corp (NYSE:WLL) to become one of the largest producers in the Bakken Shale formation, it also complicated the company’s financial situation, as it was forced to pay down Kodiak’s debt. Compared to last year, Whiting Petroleum experienced a decline in net operating cash flow, gross profit margins, and revenue. Earnings per share also dropped significantly during the fourth quarter, down to $0.44 per share, compared to $1.24 per share reported the previous quarter.
Lucas Capital Management was founded in 1996 by Russell Lucas and his father, George B. Lucas Jr. The Red Bank, New Jersey-based firm focuses primarily on the energy markets, seeking out North American oil and gas companies with long-term growth potential and strong fundamentals. Lucas Capital has around $730 million in assets under management and an equity portfolio valued at $269 million. Apart from its holdings in ETFs, the investment firm’s top three picks at the end of 2014 were represented by EOG Resources Inc (NYSE:EOG), ConocoPhillips (NYSE:COP), and Plains GP Holdings LP (NYSE:PAGP).
In its last 13F filing, Lucas Capital Management’s disclosed ownership of 127,400 shares of EOG Resources Inc (NYSE:EOG), valued at $11.73 million and representing 4.36% of its equity portfolio. The investment firm increased its exposure to the stock by 78% last quarter, after its share price dropped significantly from its 52-week high of $118.89 registered in June, to $81.07 per share in October. Ric Dillon’s Diamond Hill Capital is also bullish on EOG Resources Inc (NYSE:EOG), holding 3.12 million shares at the end of 2014.
ConocoPhillips (NYSE:COP) was also among Lucas Capital Management’s top picks last quarter, with a position of 155,600 shares. The stock dropped by 6.65% over the past 52 weeks. However, ConocoPhillips (NYSE:COP) has responded quite well to the low crude prices plaguing the industry and offers shareholders an attractive quarterly dividend yield of $0.73 per share. Last quarter, 44 investors out of the 737 funds we track held positions in the company. Its largest shareholders among institutional investors are First Eagle Investment Management, with a stake of 8.97 million shares, and Donald Yacktman’s Yacktman Asset Management, which owns 6.01 million shares.
Lucas Capital Management also held Plains GP Holdings LP (NYSE:PAGP) as one of its top picks last quarter, disclosing ownership of 383,500 shares, valued at around $9.85 million. The stock recently received a “buy” rating from sixteen analysts and while shares are currently trading at $27.77, the average twelve-month price target has been set at $32.38 per share. Daniel S. Och’s OZ Management is also backing Plains GP Holdings LP (NYSE:PAGP), as it entered a new position in the company last quarter with the acquisition of 9.99 million shares.