Though the stock had already been on the rise when he bought at about $30.40, it’s rallied further. Judging by the still-cheap valuation for Marathon Oil, Pickens may be able to secure 30% or 40% more upside in the stock’s value.

Roughly a year ago, I wrote about this company, and though Marathon would go through unexpected developmental pains in 2012, the investment case in that article stands. Marathon possesses a strong base of real estate in the U.S. and elsewhere, and management shows a stronger hand when reining in costs and boosting cash flow.

In 2012, Marathon management learned that the company’s plans to pursue a wide range of drilling activities — from the Eagle Ford shale in Texas to the oil sands of Canada to operations spanning the Middle East and Africa — was not fully appreciated or understood by investors.

As a result, several assets may be sold this year, including a 20% stake in the Athabasca Oil Sands project. According to research firm Wood Mackenzie, that stake is worth roughly $7 billion. “Assuming a transaction is completed, MRO plans to allocate the proceeds to share repurchases, accelerate development of the Eagle Ford shale, and modest debt reductions,” note analysts at global financial services firm UBS.

Analysts at Merrill Lynch suggest the company’s global drilling strategy will still have many moving parts — even after any asset sales — but investors have recently grown to accept that current drilling projects will still pay off handsomely, which explains the recent rebound in the stock. “Execution of MRO’s unconventional development program in the lower 48 states is slowly gaining recognition by the Street,” write analysts at Merrill Lynch, who have a Street-high $45 price target.

For a number of analysts who follow the company, all eyes are on Marathon’s massive acreage in the Eagle Ford shale region. (Note that rival EOG Resources (NYSE: EOG) has been one of the hottest stocks in the exploration and production sector, thanks to its highly-productive wells in that region.) Marathon’s approach to the Eagle Ford region is a bit less sexy: “MRO recognizes the outstanding economics of individual Eagle Ford wells, but it takes a big picture perspective in the development plans,” note analysts at Morgan Stanley. In effect, Marathon is slowing spending to extend the shelf life of the shale play for years to come.

[See also: “The Latest Major Energy Discovery Could “Dwarf North Dakota”]

Fadel Gheit, the well-regarded oil industry analyst at Oppenheimer, recently raised his price target on Marathon Oil from $40 to $45, noting that the company is one of the few major natural gas-focused drillers likely to generate robust free cash flow in coming years. He sees free cash flow hitting $900 million this year and $1.5 billion in 2014.

Goldman Sachs’ analysts note that 2012 was “one of Oxy’s more challenging years, arguably since the 1990s.” They note that a ramp-up in shale drilling and profits lagged forecasts throughout the year. Goldman has a $95 price target on the stock.

Yet there’s a wildcard in play, which may be the reason why Pickens decided to establish a 63,000-share position (at an average price of $78 a share). The company known as Oxy Pete is sitting on massive Californian acreage. And signs are emerging that the Golden State may become the next major new shale region as regulations coalesce to support fracking (the deep-earth extraction of energy sources) in that state.

[See also: “2 Top Ways to Profit from American Energy Independence”]

Analysts at UBS, who have a $97 price target, note that despite its recent weak quarterly results, Oxy Pete remains a prodigious cash flow producer. And that’s fueling rising share buybacks and dividend hikes. The dividend stood at $2.08 in 2012, but should rise to $3.30 a share by 2015, according to Goldman Sachs.