T. Boone Pickens, Billionaire Oil Magnate, Corporate Raider and Philanthropist, Dies at 91

T. Boone Pickens in his office in Dallas in 2009. He was, among other things, a corporate raider, a defender of shareholder rights and an unlikely environmentalist. Credit: Matt Nager for The New York Times

T. Boone Pickens, the wildcatter “Oracle of Oil,” hedge fund founder and philanthropist who rewrote the playbook for corporate raiders, has died. He was 91.

He died Wednesday of natural causes.

Pickens had been in declining health, suffering from a series of strokes and a serious fall in 2017. In late 2017, he put his sprawling 100-square-mile Mesa Vista Ranch in the Texas Panhandle on the market for $250 million, and a few months later, he closed his energy hedge fund, BP Capital, to outside investors.

“I will sorely miss his friendship and his great wit. He was a stand-up guy from the old school. I wish there were more like him today,” said billionaire investor Carl Icahn. “He and I agreed on corporate governance … we shared the same values on shareholders’ rights.”

Pickens was known as a corporate raider in the 1980s, targeting Gulf Oil, Unocal and Phillips Petroleum, a company later targeted by Icahn. Icahn described Pickens’ Texas charm and wit. He recounted how Pickens told a major oil company CEO that his earnings were down for 10 years. Revenues were also down for 10 years, as was cash flow. Icahn remembers laughing, when Pickens said “Don’t you think that’s a trend?”

In a career that started with Phillips Petroleum, Pickens later pursued clean energy projects in wind power and natural gas.

He also was a big Republican political donor, backing George W. Bush in the Texas gubernatorial and presidential races. Guests at his ranch included Dick Cheney and Nancy Reagan.

He also donated more than $1 billion over the years, including hundreds of millions to his alma mater, Oklahoma State University, which named its renovated football stadium after him.

Thomas Boone Pickens Jr. was born May 22, 1928, in Holdenville, Oklahoma. His father was a “landman,” who sold oil and mineral rights. During World War II, his mother was in charge of rationing in her region as head of the local Office of Price Administration.

As a 12-year-old paperboy, Pickens started out with 28 customers, but by acquiring adjacent routes one at a time he quadrupled his business.

“That was my first introduction to expanding quickly by acquisition — a talent I would perfect in my later years,” he recalled on his website.

His family moved to Amarillo, Texas, where he attended high school. After graduating in 1951 from Oklahoma A&M (now Oklahoma State) with a degree in geology, Pickens started working at Phillips Petroleum.

He left three years later to drill wildcat wells, first founding Petroleum Exploration with $2,500 in cash and $100,000 in borrowed money for projects in the Texas Panhandle, and later establishing Altair Oil & Gas for exploration in western Canada. The companies became Mesa Petroleum, which Pickens took public in 1964 and became one of the largest independent oil and gas companies in the United States.

“Pickens was one of thousands driving around the oil states, using public phone booths as their offices, hustling, looking at deals. Selling them, getting a crew together and a well drilled and, if lucky, hitting oil or gas, dreaming all the while of making it big, really big,” Daniel Yergin wrote in his Pulitzer Prize-winning book “The Prize: The Epic Quest for Oil, Money & Power.”

“Pickens got farther than most. He was smart and shrewd, with an ability to analyze and think through a problem, step by step.”

Corporate raider: ‘Big Oil was never the same’

Five years after creating Mesa, Pickens targeted Hugoton Production for a hostile takeover, seeing that the value of Hugoton’s extensive gas reserves in Kansas dwarfed its low stock price. Although Mesa was substantially smaller than Hugoton, Pickens gathered the support of its shareholders by promising greater returns and better management.

During the early 1980s, Pickens took his corporate raider talents to new levels, investing in chunks of undervalued oil companies, trying to take them over and making big profits even if the buyout failed. As described on his website:

“Pickens and his young band of hungry Mesa Petroleum managers grabbed hold of a monster and shook it like it’d never been jostled before. They rode that monster, and got thrown some, but Big Oil was never the same again.”

After accumulating more than 5% of Cities Service stock over the years, Pickens led Mesa’s attempt in 1982 to acquire the much larger oil company. Cities Service counterattacked by trying to acquire Mesa. A wild bidding war ensued, with Occidental Petroleum eventually winning Cities Service for $4 billion. Pickens still reaped $30 million in profit on his shares.

Later, Pickens made similar, but failed, attempts with Phillips Petroleum, Unocal and Gulf Oil. Gulf, one of the “Seven Sister” oil giants, defended itself by turning to Chevron as its “white knight.” Chevron wound up swallowing Gulf for $13.2 billion, but Pickens netted $404 million for Mesa shareholders for their Gulf stake.

Some accused Pickens of being a “greenmailer,” in which an investor purchased large amounts of a company, then launched a takeover to run up the price before bailing out. But Pickens rejected that label. “I never greenmailed anybody,” he said in an interview on his website.

But there was no arguing that Pickens’ takeover tactics made him a bundle. They also landed him on the cover of Time magazine. There he was in 1985, sitting behind a pile of poker chips — blue chips — and holding a hand of cards decorated by oil derricks.

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SOURCE: CNBC –  Marty Steinberg