Carlos Slim Triples Money on Bronco Drilling as Oil Rises
March 24, 2011, 4:34 PM EDTBy Crayton Harrison
(Updates share price in second paragraph.)
March 24 (Bloomberg) -- Carlos Slim’s investment in an Edmond, Oklahoma oil driller has more than tripled in value in the past nine months, giving the Mexican billionaire a boost as he adds to his energy investments.
Bronco Drilling Co. fell 4 cents to $10.86 at 4 p.m. New York time on the Nasdaq Stock Market. That’s more than triple its price on June 29, giving it the best performance since then among 14 industry peers, according to data compiled by Bloomberg.
Slim, who has a joint venture with Bronco in Mexico, is entering Colombia’s oil market through a separate $23.3 million acquisition. He has a 15 percent stake in Bronco, making him the second-largest shareholder after Third Avenue Management LLC, plus warrants that could boost his stake to 20 percent.
Bronco has benefited from rising oil prices and from its own strategy of selling off rigs that use older technology, reducing debt and readying new rigs with more modern design, said Brian Uhlmer, an analyst at Global Hunter Securities LLC in Houston who recommends buying the shares.
“People started paying attention to it,” Uhlmer said in a phone interview. “They figured out that management had transformed the company from a bunch of non-performing assets.”
Slim’s stake in Bronco is worth about $45.6 million, part of his public holdings of $73.8 billion, according to data compiled by Bloomberg. His Colombian investment, a stake in Geoprocesados SA’s Tabasco Oil Co., is held through publicly traded Grupo Carso SAB, whose construction unit also provides drilling services to Petroleos Mexicanos.
Betting on Commodities
Slim said in a February interview he’s betting on commodities because of the surge in demand he expects from developing countries such as India and China. Crude oil for May delivery fell 15 cents to $105.60 a barrel on the New York Mercantile Exchange, slipping from the highest level since September 2008. Prices have climbed 31 percent in the past year.
Slim’s Inmobiliaria Carso fund disclosed a stake of 2.2 million shares in Bronco in October 2008, when the stock was trading above $6. He bought an additional 2 million shares through March 2009 as the stock fell further. He has warrants to buy 5.44 million Bronco shares for at least $7 apiece.
Investor concern that oil supplies will be disrupted has heightened since the U.S. and its allies initiated preparations to attack Libyan leader Muammar Qaddafi’s troops and political unrest spread from Tunisia to Egypt, Yemen, Bahrain and Syria.
Bronco insiders have also benefited from the company’s share gains. Chairman and Chief Executive Officer Frank Harrison has sold more than 77,000 shares since Feb. 25 after an award of almost 106,000 restricted shares in January. Executive Vice President Zachary Graves sold 127,000 shares since Jan. 12 after an award of 103,000 restricted shares in January.
Bob Jarvis, a spokesman for Bronco, and Arturo Elias, a spokesman for Slim, didn’t return phone and e-mail messages seeking comment.
--Editors: Niamh Ring, James Callan
To contact the reporter on this story: Crayton Harrison in Mexico City at tharrison5@bloomberg.net
To contact the editor responsible for this story: Peter Elstrom at pelstrom@bloomberg.net
