T. Boone Pickens, a Texas-Size Businessman, Calls It Quits

T. Boone Pickens, a Texas-Size Businessman, Calls It Quits


Though Mr. Pickens, a famous fitness buff who once challenged President Barack Obama to an exercise competition, is still involved in his business affairs, his retirement ends a larger-than-life, only-in-America career.

“Everything is big in Texas, and T. Boone is the personification of that,” said Amy Myers Jaffe, a senior fellow for energy and the environment at the Council on Foreign Relations. “He bets big. He has big ideas. And he puts big numbers behind it.”

With an outsize personality and aggressive business tactics that landed him on the cover of Time magazine, Mr. Pickens became one of the few businessmen in the 1980s recognizable to wide segments of America. His influence is still widely felt. Mr. Pickens was an early advocate for shareholder rights and insisting that executives be compensated with stock. That line of thinking informed a new generation of shareholder activists, and remains gospel on Wall Street.

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The Texas oil tycoon T. Boone Pickens on his Mesa Vista Ranch, which he has put up for sale for $250 million.

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Tom Fox/The Dallas Morning News, via Associated Press

“I hope people think of me as a visionary who recognized it was important to show a new look periodically,” Mr. Pickens said in an email, via an assistant. “Predictability leads to failure.”

Mr. Pickens experienced both wild success and crushing failure during his career. He made a fortune hunting for oil in unproven terrain in the 1950s and ’60s, then reinvented himself as a corporate raider in the 1970s and ’80s. He incorrectly predicted “Peak Oil” — the idea that the maximum rate of extraction had been achieved — and lost millions with an early bet on wind energy.

A major Republican donor, Mr. Pickens supported Swift Boat Veterans for Truth, which leveled false allegations against John Kerry during the 2004 presidential campaign. Along the way, he had five wives, became a major philanthropist and saw the football stadium at Oklahoma State University, his alma mater, named for him after a donation of hundreds of millions of dollars to the school.

Even in his later years, he never stopped looking for another big score. He bought nearly 400,000 acres of water rights in the Texas Panhandle, hoping to sell that water to Dallas and Fort Worth. And last year he began drilling on his own ranch.

Yet Mr. Pickens’s most lasting impact on business has nothing to do with oil. As a corporate raider in the 1980s, Mr. Pickens — along with men like Carl C. Icahn and Michael Milken — helped develop a shrewd new playbook for making money. He would take a small stake in a public company, call on it to slash expenses and return money to investors, and often pressure the company to sell itself. He was Gordon Gekko before “Wall Street,” and his influence was profound.

That philosophy now shapes the investment decisions of big institutional investors and shareholder activists alike. Depending on whom you ask, it is responsible for the creation of a huge amount of wealth for a great many people, or for a reckless short-term perspective that is widening income inequality and destroying jobs. In either case, it happened, at least in part, because of T. Boone Pickens.

“Today you’re seeing in corporate America a lot of the things that he espoused 30 years ago,” said David Bradshaw, an investment banker at Moelis and Company who is close to Mr. Pickens. “He was ahead of his time.”

Smart and Shrewd

Mr. Pickens was born in Oklahoma’s oil patch in 1928. His father was a landman, buying leases from farmers and selling them to oil companies, and his mother oversaw gasoline rationing for several counties during World War II.

When Mr. Pickens was a teenager, the family moved to Amarillo, where his father began working for Phillips Petroleum. In 1951, Mr. Pickens earned a degree in geology from what is now Oklahoma State University, and went to work for Phillips.

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Mr. Pickens promoting his Pickens Plan in 2008 in Topeka, Kan. The plan called for less reliance on oil from the Middle East and a greater national emphasis on natural gas and renewable energy.

Credit
Larry W. Smith/Getty Images

After just three years, he struck out on his own as an oilman, traveling the state by car, shaving in gas station restrooms, raising money from investors, buying up patches of land and drilling in the oil-rich Permian Basin.

“Pickens got farther than most,” Daniel Yergin wrote in “The Prize,” his authoritative history of the oil business. “He was smart and shrewd, with an ability to analyze and think through a problem, step by step.”

A decade on, he had raised money from New York investors and consolidated his various holdings into Mesa Petroleum, which he took public in 1964.

As the chief executive of a publicly traded corporation, he came to understand that the markets didn’t always do a good job of determining the true value of a company. Oftentimes, the oil and gas in the ground were worth substantially more than what was reflected in the share price.

With this insight, Mr. Pickens attempted to take over Hugoton Production, a larger competitor that he believed was undervalued. In 1969, his hostile takeover succeeded, and he merged Hugoton into Mesa.

Some years later, he acquired a stake in another company, Cities Service, and then tried to acquire the company. In doing so, he kicked off a bidding war, which he ultimately lost when Cities Service was acquired by Occidental. Nonetheless, he made $30 million in profit on his shares.

At the time, mergers were reshaping the oil and gas industry, and Mr. Pickens reinvented himself as a full-blown corporate raider. In 1983, Mesa began to buy Gulf Oil stock. Mr. Pickens then pressured Gulf to restructure itself in a way that would lower taxes and give shareholders higher dividends, raising the share price.

“Back then, corporate managers thought they owned the companies they ran,” Mr. Pickens said. “They didn’t, and often had little ownership in those companies. Arguing that shareholders were the owners and management just employees was a novel concept.”

As a result of Mr. Pickens’s agitating, Gulf Oil was sold to Chevron for $13.2 billion. Mesa made $500 million. Mr. Pickens hadn’t taken over Gulf Oil. But simply by showing up and stirring things up, he made shareholders, including himself, a great deal of money.

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An image that Mr. Pickens, a fitness buff, posted on Instagram in 2016.

In the years to come, Mr. Pickens followed a similar playbook with many companies, including Unocal, Phillips, Newmont Mining and Diamond Shamrock. Again and again, he would take a stake, cause some trouble and make substantial profits for himself and others.

“He wasn’t afraid to stand up to some of these guys in the oil patch,” Mr. Icahn said in an interview. “Back in the ’80s, that went a long way to letting them know that shareholders have certain rights.”

But as the boomtown mentality of the 1980s receded, Mr. Pickens would not always keep up with the times.

“In oil, you can make a lot of money and lose a lot of money,” Ms. Jaffe said. “And it can happen very quickly.”

Not Wrong, Just Early

By 1996, Mr. Pickens had receded from the spotlight, and his fortune was dwindling. Mesa was sputtering, and when new management came in, Mr. Pickens left the company he had built from the dusty ground up.

So he started a hedge fund.

It was the ’90s after all, and Mr. Pickens raised some $30 million from friends, chipped in about $10 million of his own and called it BP Capital. The losses came swiftly, and within three years, he had squandered almost all of the money.

Then in 2000, he bet heavily on natural gas, believing that the price would soon rise. He was right, and again made a mint. Mr. Pickens proceeded to go on a hot streak, correctly betting on price fluctuations in oil and gas for years and becoming a billionaire.

He began giving away money as fast as he made it. He donated $50 million to University of Texas institutions in Houston and Dallas. He has given some $500 million to Oklahoma State, where the football team now plays in Boone Pickens Stadium. And he developed Mesa Vista Ranch, acquiring adjacent properties, installing man-made lakes and erecting palatial estates.

“I truly believe I was put on this Earth to make money, but also to be generous with it,” Mr. Pickens, whose current worth is estimated at $500 million, said in his email.

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Another Instagram post from 2016. Two years earlier, Mr. Pickens challenged President Barack Obama, who is 33 years younger, to a fitness challenge.

Famously cantankerous, Mr. Pickens made his share of enemies. He was accused of being a “greenmailer” — taking a stake in a company and then making himself so annoying that management would pay him to go away — though that’s not precisely what he did.

And his views on immigration have often been extreme. Mr. Pickens, who hosted a fund-raising meeting for President Trump at Mesa Vista, echoed the president’s calls for a curb on immigration from Middle Eastern countries. “I’d cut off the Muslims from coming into the United States until we can vet these people,” he said.

Mr. Pickens was still restless in his early 80s. In 2008, convinced that the United States’ reliance on oil imported from the Middle East posed a major economic and national security threat, he pushed what he called the Pickens Plan. It was an effort to convince Americans that it was time to abandon Middle Eastern oil, embrace natural gas and make a transition to renewable power.

“We’re infidels with most of these people, and they have no use for us,” he said in 2010. “We’re getting more and more dependent on the wrong people.”

Mr. Pickens spent upward of $100 million promoting his ideas. Around the same time, he announced plans to build the world’s largest wind farm in the Texas Panhandle.

They were bold bets, but they were misguided. Within years, the cost of both oil and gas had fallen. The wind farm was never built.

Accepting Mortality

As Mr. Pickens withdraws from the public stage, his influence is still widely felt. When activist investors like Nelson Peltz and Bill Ackman take on big-name companies like Procter & Gamble and Chipotle, they are, wittingly or not, following in his footsteps.

“This way of thinking about value and the shareholder was revolutionary at the time,” Ms. Jaffe said. “He set a course that others imitate today.”

Over the past year, Mr. Pickens suffered a series of strokes, and took what he described as a “Texas-sized fall.” His failing health prompted a bout of self-reflection.

“Just a year ago I felt immortal, wearing my age with pride, even joking about it,” he wrote on LinkedIn. “But things have changed for me since the strokes. I clearly am in the fourth quarter, and the clock is ticking and my health is in decline, much as it is with others in my stage of life.”

It was a remarkable admission from a wildcatter who, even at 89 years old, was still drilling. Mr. Pickens, who shook up the oil business, who shaped a generation of shareholder activists, who supported dubious propaganda aimed at a presidential candidate and who was ahead of his time in evangelizing for renewable energy, was finally calling it quits.

“Don’t for a minute think I’m being morbid,” Mr. Pickens wrote. “When you’re in the oil business like I’ve been all my life, you drill your fair share of dry holes, but you never lose your optimism.”



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