He's back. Some 20 years after shaking up several major oil companies with unsolicited acquisition offers, T. Boone Pickens Jr. has returned to the energy-investment arena by taking positions in not one, but two, U.S. independent producers. His Dallas-based BP Capital Energy Equity Fund LP owns 5.3 million common shares, or approximately 8.4%, of Tulsa-based Vintage Petroleum Inc. (NYSE: VPI) and approximately 7.1% of Radnor, Pa.-based Penn Virginia Corp. (NYSE: PVA). Vintage had 34.6 million BOE of production last year and a year-end long-term debt-to-capitalization ratio of 57.7%. Penn Virginia produced 13.13 billion cu. ft. of gas and 164,000 bbl. of oil last year, following its acquisition of Synergy Oil & Gas, a South Texas producer, during the third quarter, and it made an initial public offering of Penn Virginia Resources Partners LP (NYSE: PVR), a coal business, and used most of the $145 million of net proceeds to reduce debt. In filings with the SEC, BP Capital Energy said it considers the companies' stock undervalued and candidates for a leveraged buyout or sale. It added that it might consider making an offer, but made no assurances that it would do so. BP Capital Energy used working capital and margin-account loans from Bear Stearns Securities Corp. to make the investments. Penn Virginia appears to be under the heaviest pressure-not from Pickens and his group, but from New York investor Daniel S. Loeb, whose Third Point Management Co. LLC owns 500,000 shares, or a 5.6% interest, in the company. In a Feb. 27 letter to Penn Virginia president and chief executive officer James Dearlove, Loeb criticized the purchase of Synergy as dilutive, called for a drastic cut in drilling and recommended that a sale of the company's oil and gas assets be contemplated. "Indeed, Third Point has had informal discussions with a public competitor in the oil and gas industry with significant reserves complementary to the company's Appalachian properties," Loeb continued. Many independents have acknowledged their common shares are undervalued as they court investors. This resurgent shareholder activism probably isn't what they had in mind. -Nick Snow
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