Valero Energy Corporation (VLO), Southwestern Energy Company (SWN): T. Boone Pickens’ Three Top Positions

Range Resources – Quite expensively valued

Range Resources is an independent energy company based in Texas, with around 6.5 trillion cubic feet equivalent in its proved reserves. Range Resources also had the majority of its proved reserves in natural gas, accounting for 74% of its total 2012 proved reserves. T. Boone Pickens owned 136,050 shares in the company, representing nearly 8.5% of his total portfolio at the end of Dec. 2012. Range Resources is trading at $82 per share, with a total market cap of $13.4 billion. It is valued quite expensive in the market, at more than 20.3 times EV/EBITDA. The company is paying dividend to its shareholders, but the dividend yield is quite low at only 0.2%. As mentioned in the previous article, Range Resources had also had a fluctuating operating performance and not-so-strong balance sheet. It has recently announced that it would issue $500 million senior subordinated debt due 2023 to repay its borrowings.

My Foolish take

Southwestern has a reasonable valuation, but it is certainly not so cheap. Range Resources, on the other hand, is valued quite expensively. Among the three, I like Valero Energy Corporation (NYSE:VLO) the best due to its decent dividend yield with conservative payout ratio and its current low valuation.

The article T. Boone Pickens’ Three Top Positions originally appeared on Fool.com and is written by Anh Hoang.

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