Pickens Reduces Energy Investments, Holdings Fall 97%

Date: Wednesday, February 18, 2009
Author: Joe Carroll, Bloomberg.net

T. Boone Pickens, the billionaire hedge-fund manager who forecasts oil will more than double in the next 10 months after being driven down by the global recession, shed energy-related shares as their value declined, a public filing showed today.

Pickens, who held 26 energy companies in his BP Capital Management LP fund as of a Nov. 14 filing, had nine according to a filing made today.

As Pickens sold positions, the worth of the holdings in the fund tumbled 97 percent during the final three months of 2008 to $40 million from $1.29 billion on Sept. 30, a comparison of the filings showed.

“It looks like a big commodity dump,” said Gianna Bern, president of Flossmoor, Illinois-based Brookshire Advisory & Research Inc., an energy research and consulting firm. “Crude oil will not come back until we see a global economic turnaround,” she said.

Some smaller clients of oil services companies Halliburton Co. and Schlumberger Ltd., both based in Houston, are finding it hard to raise financing for projects because of the credit crunch, Bern said.

Pickens manages funds linked to energy commodities and equities. On Dec. 9, he said he wouldn’t buy power-related stocks until the economy rebounds.

Jay Rosser, a spokesman for Dallas-based BP Capital LLC, declined to comment. Rosser told Bloomberg News in December that BP’s equity funds had reduced normal requirements for investors to withdraw cash and had a 65 percent withdrawal rate as of December 17. Rosser also said in December BP Capital had converted its holdings into cash.

Pared Holdings

Pickens reduced his holdings in Los Angeles-based oil producer Occidental Petroleum Corp. from 2 million shares to 100,000, the filing showed. He pared his holdings in Geneva-based Transocean Ltd., an offshore oil driller, from 1.1 million shares to 300,000. And he reduced his position in Calgary-based Suncor Energy Inc., an oil-sands producer, from 2.53 million shares to 100,000 shares.

Pickens’s fund sold all holdings in 19 companies including 1.3 million shares of Schlumberger Ltd., 2.4 million shares of Halliburton Co. and 3.6 million shares of Calgary-based Talisman Energy, the filing showed. He added 100,000 shares of Oklahoma City-based Chesapeake Energy Corp. and 100,000 shares of St. Louis-based Peabody Energy Corp.

A Standard & Poor’s index of 39 oil, coal and rig companies declined nearly 25 percent since the Sept. 15 bankruptcy of Lehman Brothers Holdings Inc. heralded the collapse of global credit markets. During the same period, crude and natural-gas futures tumbled 63 percent and 43 percent, respectively.

Oil for March delivery fell $2.58, or 6.9 percent, to settle at $34.93 a barrel on the New York Mercantile Exchange, the biggest decline since Jan. 27. Prices are down 22 percent this year and have fallen from a record $147.27 in July.

To contact the reporter on this story: Joe Carroll in Chicago at jcarroll8@bloomberg.net; Mark Chediak in San Francisco mchediak@bloomberg.net.