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Billionaire T. Boone Pickens’ Energy Moves: Occidental Petroleum Corporation (OXY), Marathon Oil Corporation (MRO), Range Resources Corp. (RRC)

BP CAPITALBillionaire investor and oilman-turned-hedge fund manager T. Boone Pickens runs an energy-concentrated hedge fund, BP Capital. His fund is generally invested 90% in energy-related stocks and 10% in commodities. With energy a hot-button topic, I thought it only worthwhile to take a look at how one of the top energy investors and his hedge fund are investing for 2013 (see all of Pickens’ picks).

Pickens is upping his stake…

One of Pickens’ biggest bets is on Range Resources Corp. (NYSE:RRC) , which is BP Capital’s third largest holding after a 63% increase in the shares his fund owned during the fourth quarter. The oil and gas company now makes up 8.5% of the fund’s portfolio. Range Resources Corp. (NYSE:RRC) does appear a bit expensive, trading much higher than the other oil and gas companies at 38 times earnings and 21.5 times cash flow, but its recent performance and growth prospects suggests the premium is warranted. Range managed to post higher production and lower unit costs last quarter, and the oil and gas company has a relatively diversified asset portfolio between long reserve-life Appalachian assets and large-volume Gulf Coast properties. The company also plans to up production for 2013, expecting 20% to 25% annualized production growth with its focus on increasing liquids production (read about fracking related concerns for Range).

Pickens’ new positions…

Occidental Petroleum Corporation (NYSE:OXY) was a new position and now makes up 4.8% of Pickens’ portfolio. The stock also pays a relatively solid dividend yield at 3.1%, which only consumes 38% of earnings (read more about safe dividend energy stocks). A couple compelling aspects about the oil and gas company include the fact that Occidental Petroleum Corporation (NYSE:OXY) trades relatively in line with the industry, whereas it has an industry leading 7% return on assets and relatively low long-term debt to equity of 18%. Occidental has been divesting non-core assets and focusing on upstream business; now the oil and gas company has tailored its portfolio to long reserve-life properties with high crude oil exposure.

Marathon Oil Corporation (NYSE:MRO) was another new position for BP Capital, making up 5.6% of its portfolio. Marathon is another major oil and gas company that pays a nice dividend, yielding 2%. This is on a 30% payout of earnings. Exploration and production accounts for 90% of Marathon’s total income; however the company is venturing into oil sands mining and integrated gas. The sands segment mines and extracts oil sand deposits in Canada, while the integrated gas division transports products manufactured from natural gas, including LNG. What’s more is that both of these segments are seeing robust growth. The oil sands business improved 9.1% year-over-year last quarter and the integrated gas segment saw income up 75% year-over-year.

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