Billionaire John Paulson Likes This North Dakota Oil Stock

The billionaire hedge fund manager has been accumulating a position in this Bakken producer.

Mar 1, 2014 at 1:45PM

When John Paulson loads up on shares of a company, smart investors should take note. In 2006, the billionaire hedge fund manager predicted the collapse of the U.S. subprime lending market. And in 2010, he set another hedge fund record by making nearly $5 billion in a single year. 

It never hurts to peek over the shoulders of the world's greatest investors. So what is Paulson buying now? According to the latest 13-F filings from the SEC, his hedge fund Paulson & Co. has acquired a 10 million-share position in Whiting Petroleum (NYSE:WLL). This brings Paulson's total stake in the company to slightly more than $640 million.

Why is Paulson so bullish on Whiting?
Two factors may have attracted his attention. First, the company has posted some truly incredible results out of the North Dakota Bakken. Over the past three years, Whiting has grown its production more than 44% to 92,800 barrels of oil equivalent per day. And during the same time frame, the company has increased its earnings per share 32%.

But this might just be the beginning. According to recent estimates from the United States Geological Survey, the Lower Three Forks could contain some 3.7 billion barrels of undiscovered, technically recoverable crude oil -- slightly larger than the Bakken field that sits above it.

As part of this effort, Whiting drilled all the way through the lowest parts of the Three Forks to determine the prospects of the lower benches. As the company delineates and de-risks these lower benches, it could be a hidden catalyst for the stock.  

Second, Whiting may be sitting on America's next big shale play. The company owns about 64,240 net acres the Colorado Niobrara. And while the field has been known to geologists for almost a century, it has only been through the application of new technologies like horizontal drilling and hydraulic fracturing that the energy industry has been able to unlock the Niobrara's bounty. 

If there's one thing we know about Niobrara it's that it's oil rich. Per drilling-spacing unit the play has almost 60 million barrels of oil in place -- about twice that of the Bakken. And according to numbers provided by the Colorado Oil and Gas Conservation, the play could hold an estimated 3.6 billion barrels of recoverable oil equivalent.

Drilling economics also compare favorably to the Bakken. According to figures provided by Whiting, the average well in the Niobrara costs in the neighborhood of $7 million to $8 million to complete, and CEO James Volker claims that the company is generating a 400% return on every well it drills in the region.

And Whiting isn't the only company to see the Niobrara's potential. Over the past few years, other smart money operators have quietly accumulated vast amounts of land in this little-known shale play.

Noble Energy (NYSE:NBL) CEO Charles Davidson describes the Niobrara as a "top-tier oil play," and his company plans to invest $1.7 billion in the formation in 2014. Results have been so good that management has accelerated its development program, aiming to triple production within five years.

Energy giant Anadarko Petroleum (NYSE:APC), which owns about 350,000 acres in the region with as much as 1.5 billion barrels of recoverable reserves, is also betting big on the play. The company has budgeted $1.5 billion to develop its acreage with plans to drill 150 wells this year. Even for a big company like Anadarko, those are substantial figures.

Foolish bottom line
Whiting has spent billions to build out its position as a premier player in the Bakken and Niobrara. By sitting on two prime shale plays, there're many things that can go right for this company. Combined with an endorsement from John Paulson, this stock could be a breakout performer in 2014.

Get in before the crowd
Let's face it, every investor wants to get in on revolutionary ideas before they hit it big. Like buying PC-maker Dell in the late 1980's, before the consumer computing boom. Or purchasing stock in e-commerce pioneer in late 1990's, when they were nothing more than an upstart online bookstore. The problem is, most investors don't understand the key to investing in hyper-growth markets. The real trick is to find a small-cap "pure-play", and then watch as it grows in EXPLOSIVE lock-step with it's industry. Our expert team of equity analysts has identified 1 stock that's poised to produce rocket-ship returns with the next $14.4 TRILLION industry. Click here to get the full story in this eye-opening report.


Robert Baillieul has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Money to your ears - A great FREE investing resource for you

The best way to get your regular dose of market and money insights is our suite of free podcasts ... what we like to think of as “binge-worthy finance.”

Feb 1, 2016 at 5:03PM

Whether we're in the midst of earnings season or riding out the market's lulls, you want to know the best strategies for your money.

And you'll want to go beyond the hype of screaming TV personalities, fear-mongering ads, and "analysis" from people who might have your email address ... but no track record of success.

In short, you want a voice of reason you can count on.

A 2015 Business Insider article titled, "11 websites to bookmark if you want to get rich," rated The Motley Fool as the #1 place online to get smarter about investing.

And one of the easiest, most enjoyable, most valuable ways to get your regular dose of market and money insights is our suite of free podcasts ... what we like to think of as "binge-worthy finance."

Whether you make it part of your daily commute or you save up and listen to a handful of episodes for your 50-mile bike rides or long soaks in a bubble bath (or both!), the podcasts make sense of your money.

And unlike so many who want to make the subjects of personal finance and investing complicated and scary, our podcasts are clear, insightful, and (yes, it's true) fun.

Our free suite of podcasts

Motley Fool Money features a team of our analysts discussing the week's top business and investing stories, interviews, and an inside look at the stocks on our radar. The show is also heard weekly on dozens of radio stations across the country.

The hosts of Motley Fool Answers challenge the conventional wisdom on life's biggest financial issues to reveal what you really need to know to make smart money moves.

David Gardner, co-founder of The Motley Fool, is among the most respected and trusted sources on investing. And he's the host of Rule Breaker Investing, in which he shares his insights into today's most innovative and disruptive companies ... and how to profit from them.

Market Foolery is our daily look at stocks in the news, as well as the top business and investing stories.

And Industry Focus offers a deeper dive into a specific industry and the stories making headlines. Healthcare, technology, energy, consumer goods, and other industries take turns in the spotlight.

They're all informative, entertaining, and eminently listenable. Rule Breaker Investing and Answers are timeless, so it's worth going back to and listening from the very start; the other three are focused more on today's events, so listen to the most recent first.

All are available for free at

If you're looking for a friendly voice ... with great advice on how to make the most of your money ... from a business with a lengthy track record of success ... in clear, compelling language ... I encourage you to give a listen to our free podcasts.

Head to, give them a spin, and you can subscribe there (at iTunes, Stitcher, or our other partners) if you want to receive them regularly.

It's money to your ears.


Compare Brokers