As we’ve seen before, shareholder activism can lead to big wins in the oil sector. Midcap E&P firm WPX Energy (WPX) is a prime example. The oil stock was spun off from pipeline giant Williams (WMB) back in 2011 and has since focused on producing natural gas and natural gas liquids in Colorado, New Mexico, North Dakota, Pennsylvania and Wyoming. This includes new acreage in the prolific Bakken shale.
However, after being spun off, WPX hasn’t exactly lived up to its potential on the profit front. And after numerous quarterly losses, activist hedge fund Taconic Capital Advisors LP — WPX’s largest hedge fund — got mean and initiated a series of proposals.
These include replacing the current CEO with one more focused on cost controls, spinning off the firm’s pipeline and gathering asset into a master limited partnership (MLP) as well as shrinking the size of the company’s board.
All of which, should help make WPX realize profits in 2014. And given the fact the WPX stock is up about 35% in 2014 — without any actual earnings — more good times could be ahead for WPX stock investors once it starts actually making money.