Paulson now top shareholder in North Dakota's largest oil producer

[February 18, 2015]  By Ernest Scheyder

WILLISTON, N.D. (Reuters) - Hedge fund Paulson & Co has boosted its stake in Whiting Petroleum Corp to become the No. 1 shareholder in North Dakota's largest oil producer, taking advantage of plunging crude prices that have pummeled the company's stock.

Paulson, which also holds large stakes in Time Warner Cable Inc and Shire Plc, added about 4.1 million shares to its position in Denver-based Whiting in the fourth quarter of 2014, a filing with the U.S. Securities and Exchange Commission showed on Tuesday.

The New York-based hedge fund, led by investor John Paulson, was gobbling up more Whiting shares just as dropping crude prices eroded their value, a sign Paulson thought perhaps Wall Street was undervaluing the company.

Indeed, Whiting's shares have lost about 54 percent of their value in the past six months, mirroring drops at many peers.

The stock purchases helped Paulson eclipse mutual fund manager Vanguard Group as Whiting's largest shareholder. Paulson's stake was worth roughly $528.5 million as of Tuesday's close.

Paulson was boosting its stake late last year just as Whiting was closing on its $1.55 billion buyout of smaller rival Kodiak Oil & Gas Inc.

That deal allowed Whiting to become the biggest oil producer in North Dakota's Bakken shale formation, one of the largest contiguous reserves in the world. Harold Hamm's Continental Resources Inc was previously the largest.

The Kodiak deal likely caught Paulson's eye as a further example of the company's potential. Whiting's proven oil reserves rose about one-third last year largely as a result of the Kodiak deal, sharply increasing its growth potential.

A Whiting representative was not available to comment on Paulson's stock purchases.

The company is scheduled to report quarterly earnings and its 2015 budget on Feb 25, and many analysts expect the company to mimic other oil companies by slashing spending.

(Reporting by Ernest Scheyder)

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