T. Boone Pickens, Jr.

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T. Boone Pickens, Jr.
T. Boone Pickens, Jr.
Born	May 22 1928 (1928-05-22) (age 79) Holdenville, Oklahoma
Occupation	Financier; Chairman, BP Capital Management
Net worth	US$3.0 billion (2007)
Spouse	Madeleine Pickens

Thomas Boone Pickens, Jr. (born May 22, 1928) is an American businessman who chairs the private equity firm BP Capital Management. He was a well-known takeover artist during the 1980s. With an estimated current net worth of about $3 billion, he is ranked by Forbes as the 117th-richest person in America and ranked 369th in the world.

1 Early years
2 The mergers and acquisitions years
3 Contributions and donations
4 Recent interests
5 Personal life and interests
6 External links
7 References
8 Citations

Early years

Pickens was born in Holdenville, Oklahoma. His father worked in the oil business as an oil and mineral rights leaser (Petroleum Landman), and his mother ran the Office of Price Administration during World War II, rationing gasoline and other goods for four counties.^[1] As his mother was about to give birth to Boone, doctors told his father that complications had arisen, and that they could save only Boone or his mother.^[2] His father refused to accept the doctors' decision, and finally directed that they perform the first Caesarean section in the history of the Holdenville hospital.^[2] His mother survived.^[2] Pickens was a child during the depression and although money was tight his family always had food on the table.^[3] "My grandmother kept a large garden and some nights we had meat to go with the vegetables and some nights we didn’t, but we never went hungry. My mother and grandmother were frugal people, and they felt it was a real privilege to work and have a job. So I always worked."^[3] Pickens delivered newspapers as an 11-year old boy and quickly expanded his newspaper route from 28 papers to 156.^[3] "I did that not by getting new customers," says Pickens, "but by merging with routes that were contiguous to me. That was my first introduction to expanding quickly by acquisition—a talent I would perfect in my later years."^[3] In the late 1930's the oil boom in Oklahoma was ending and Pickens' father decided to move the family to Amarillo, Texas.^[3] Pickens didn't want to move but eventually adjusted to the larger city, helped in part by his skill at basketball and a coach who inspired him.^[3] "He told us to play every game for all we’re worth," says Pickens, "but when the game’s over, it’s over. That taught me not to dwell too much on my losses or successes."^[3] Pickens attended Texas A&M on a basketball scholarship but lost the scholarship^[3] and transferred to Oklahoma A&M (now Oklahoma State University), joining Sigma Alpha Epsilon fraternity. He graduated from Oklahoma A&M with a degree in geology in 1951. The 1950s were difficult times for the oil industry and petroleum geologists.^[3] After graduation Pickens was unemployed for a time and asked then Oklahoma State basketball coach Henry Iba for help.^[4] Iba set Pickens up with two interviews for high-school basketball coaching jobs but he wanted something in return.^[4] "If I get a job for you, you've got to send me a player," Pickens said Iba told him.^[4] Although Pickens didn't end up becoming a coach, the favor Iba did for him was the impetus behind Pickens' decision 50 years later to make a $165 million donation to Oklahoma State University's athletic program.^[4] "Mr. Iba, he would be very, very happy with my performance," Pickens said.^[4] Pickens finally got a job working for Phillips Petroleum and was one of only seven in his graduating class who found an oil-related job.^[3] He stayed with Phillips until 1954.^[5] After a period as a wildcatter, he struck out on his own founding the company that became Mesa Petroleum in 1956.^[5]

The mergers and acquisitions years

Pickens was one of the first independent oilmen to grow his company by acquisitions rather than by just exploration. Before reaching the age of 40, Pickens led Mesa's first big acquisition, the Hugoton Production Company, which was 30 times the size of Mesa.^[6] By 1981, Mesa had grown into one of the largest independent oil companies in the world, and Pickens shifted his focus to acquiring other oil and gas companies. He spent much of the decade targeting undervalued companies, making solicited and unsolicited buyout bids and other merger and acquisition activity. This made Pickens a celebrity during the 'deal-making' 80s. His most publicized deals included attempted buyouts of Cities Service, Gulf Oil, Phillips Petroleum, and Unocal.^[7] These as well as other deals placed Pickens at the center of controversy during the 80s. His celebrity rose so quickly after the Gulf Oil takeover bid that he appeared on the cover of Time magazine^[8] and briefly considered running for president in the 1988 elections . During this period, he was often characterized as a corporate raider and greenmailer, as many of his deals were not completed though Pickens and the shareholders he represented received substantial profits through the eventual sale of their stock. His later takeover targets included Newmont Mining, a New York-based firm, Diamond Shamrock, and Koito Mfg., Ltd., a Japanese auto-parts manufacturer, making substantial gains in the process.^[9] He was also a major force in the creation of the United Shareholders Association (USA), which from 1986 - 1993 attempted to influence the governance of several large companies. After nearly two years of periodic hearing and debate, in July 1998 the Securities and Exchange Commission voted 4-1 to approve a one-share, one-vote rule, a primary USA objective. On the local level, Pickens chaired the Board of Regents of West Texas State University and the Potter County, Texas Republican Party. Pickens organized a campaign in the mid-1980s against the Amarillo Globe-News newspaper, for what he claimed was inaccurate reporting about his deals and Mesa. Although the newspaper owner, Morris Communications, replaced its publisher twice during the conflict, Pickens' attempts to have the paper change its editorial policy failed. Shortly thereafter, in 1989, Pickens and Mesa moved to Dallas.^[10]

Contributions and donations

Donations to Oklahoma State University

Boone Pickens Stadium at Oklahoma State University in Stillwater, Oklahoma

In recent years, Pickens has focused his energy on his alma mater, the Stillwater campus of Oklahoma State University (OSU). Through his contributions, Pickens has spearheaded an effort to create an athletic village just north of the existing campus. In order to do so, hundreds of homes were purchased by the OSU administration using Pickens' contributions. Pickens' gift remains the largest donation to a university's athletic program in collegiate history. His total contributions to OSU come to over $290 million dollars. Over $265 million, or 92%, of his donations have been towards athletics. Pickens also has made substantial academic gifts to Oklahoma State University, particularly to the School of Geology, which is named for him. On December 30, 2005, Pickens made a $165 million gift to Oklahoma State University. The New York Times reported that "the money spent less than an hour on December 30 in the account of the university's charity, O.S.U. Cowboy Golf Inc., before it was invested in a hedge fund controlled by Mr. Pickens, BP Capital Management." [1] Pickens, who is on the board of the O.S.U. Cowboy Golf, waived any management fees for the OSU monies, however, and all profits of the fund go to growing the OSU gift. The gift is intended to help fund an upgrade of the football stadium and construction of an athletic village, but sparked controversy because OSU planned to use eminent domain to acquire residential property for the projects. [2] The donation comes after a $70 million gift from Pickens to OSU in 2003, which was similarly structured using O.S.U. Cowboy Golf, Inc. [3] On ESPN's Pardon the Interruption, Michael Wilbon said that after these gifts, Pickens "is now the owner of Oklahoma State athletics", and remarked that "no coach should dare run afoul of Pickens now...He's got everyone in Stillwater in his pocket, which is dangerous." On July 28, 2007 the Board of Regents of Oklahoma State University approved a resolution to move $28 million from the OSU Foundation into Pickens' BP Capital Management company in Dallas. Oklahoma State has previously invested $277 million in the fund. Pickens has been waiving fees for the university's investments with his fund. [4]

Political Interests and Contributions

Since 1980, Pickens has contributed over $5 million in political donations.[5] Pickens and friend and fellow financier Harold Clark Simmons are financial supporters of President George W. Bush, having contributed heavily to both his Texas and national political campaigns. In 2004, Pickens contributed generously to 527 Republican groups, including a $3 million contribution for the Swift Vets and POWs for Truth attacking Bush's rival, John Kerry, and $2.5 million to the Progress for America advocacy group. Pickens made a $250,000 contribution for Bush's second inaugural celebration. Pickens has offered $1 Million to anyone who can prove any of the Swiftboat charges untrue. Kerry has accepted the challenge and said he will disprove the charges November 17, 2007.[6] On July 16, 2007, Pickens wrote an article for the National Review supporting Rudy Guiliani for President. "In Rudy Giuliani, a gracious and committed public servant I’ve known for many years, we see that rare blend of big-picture vision and proven track record of achieving the “impossible.” We see a forward-looking, accomplished executive eager to tackle the challenges of today’s America and ensure that tomorrow we wake up stronger, freer, and more united than ever before."[7] Pickens is an executive-committee member of the Rudy Giuliani Presidential Committee. Pickens chaired the celebration for the 40th anniversary of the American Spectator, a conservative U.S. monthly magazine covering news and politics.^[11]

Humanitarian contributions

Pickens and employees of his BP Capital LLC donated $7 million to the Hurricane Katrina relief effort. The Chronicle of Philanthropy lists Pickens as among its largest charitable givers 2005 and 2006. He has donated nearly a half a billion dollars to philanthropic causes during his career. On May 16, 2007, Pickens donated $100 million to two University of Texas health care institutions. The gifts were donated to the UT Southwestern Medical Center at Dallas and The University of Texas M.D. Anderson Cancer Center in Houston. The donations are required to grow to $1 billion within twenty-five years before they can be disbursed by the recipient institutions. On August 23, 2007, Bizjournals.com reported that Pickens is donating $2.5 million to Happy Hill Farm Academy/Home, a residential school for at-risk children and teenagers, to build a training center and guest lodge. Pickens donated $1 million to Happy Hill Farm for the construction of a new academic campus at the residential school in February 2007. ^[12] On December 5, 2007 the Dallas Business Journal reported that Pickens had donated $6 million to Jubilee Park located at S. Carroll Avenue and Lindsley/Parry Avenue in Dallas and would man a bulldozer to begin demolition of an abandoned building across the street from a kindergarten Head Start program in Jubilee Park.^[13]

Recent interests

At 79 years of age, Pickens remains as active as when he made his fame on Wall Street more than 20 years ago.^[14] When asked why he doesn’t retire, "I'm afraid I’ll die," says Pickens.^[14] "I like to work and I like deals. I like to be associated with younger people. It keeps the motor running at a high rate of speed," he adds.^[14] Pickens interests are running his multi-billion dollar hedge fund, promoting natural gas as an alterative fuel, building the world's largest wind farm, and promoting athletics at Oklahoma State University.

Hedge fund management

Pickens founded BP Capital and has a 46% interest in the company which runs two hedge funds, Capital Commodity and Capital Equity, both of which invest primarily in oil and natural gas. In 2006 Pickens earned $990 million from his equity in the two funds and $120 million from his share of the 20% fees applied to fund profits.[8]

Natural gas as an alternative fuel

Pickens has begun speaking out on the issue of Peak Oil, claiming that world oil production is about to enter a period of irrevocable decline. He has called for the construction of more nuclear power plants, the use of natural gas to power the country's transportation systems, and the promotion of alternative energy. Pickens' involvement with the natural gas fueling campaign is long-running. He formed Pickens Fuel Corp. in 1997 and began touting natural gas as the best vehicular fuel alternative because it's a domestic resource that, among many advantages, is clean (Natural Gas Vehicles or NGVs emit up to 95% less pollution than gasoline or diesel vehicles) and reduces foreign oil consumption. Reincorporated as Clean Energy in 2001, the company now owns and operates natural gas fueling stations from British Columbia to the Mexican border. On September 19, 2007, Pickens told CNBC that the price of oil could rise to $100. "Demand is up and supply is flat, so it's got to go on up," said Pickens, whose company is betting on natural gas for vehicles. "I can give you an Oklahoma guarantee that natural gas will never sell above diesel and gasoline prices" as fuel for vehicles Pickens added.^[15]

Trip to China

On July 20, 2007, the Wall Street Journal reported that Pickens, on his first trip to China, has announced that he is looking to find a local partner to set up a chain of retail natural-gas fueling stations in China. "Natural gas is cheaper and better for transportation," he told reporters in Beijing.[9] The Dallas Morning News reported on August 1, 2007 that Pickens, back from his trip to China, had not made a deal to supply natural gas. "That's a long way to go when you've got plenty of deals in your own back yard to hunt for," said Pickens. Pickens added that his most lasting impression of Beijing was the smog. "Air quality is horrible. It was worse than I've ever seen in Los Angeles, even on its worst days 40 years ago. If they'd had the Olympics when I was there, that 100-yard dash would have been a relay." [10]

World's largest wind farm

In June 2007, Pickens announced that he intends to build the world's largest wind farm by installing large wind turbines in parts of four Panhandle counties. The project would produce up to four thousand megawatts of electricity. Pickens' Mesa Power LP will undertake the construction. If completed, the farm would generate more than five times the 735 megawatts produced at the present largest such farm near Abilene, according to Susan Williams Sloan, spokesman for the American Wind Energy Association.^[16] On August 16, 2007, Pickens' Mesa Power announced that it had filed documents with the state of Texas to add four thousand megawatts of electricity to the state grid. The filing with the Electric Reliability Council of Texas (ERCOT) projected that the project would be completed in 2011 and would include up to 2,700 turbines on up to 200,000 acres in Roberts and adjacent counties in the Texas Panhandle. "We are now meeting with Panhandle landowners and negotiating wind lease and easement agreements," said Pickens. "We are excited at how quickly the pieces are falling into place." ^[17] The Dallas Business Journal reported on September 7, 2007 that an election has been set for November 2007 for fresh water supply districts in Roberts and Kaufman counties. Only five people live within the proposed district's boundaries and will be able to vote in the election. If the special district is approved in the election, Pickens' company will need to work with land owners to secure leases for placing windmills on their properties.^[18] On November 7, 2007 the Houston Chronicle announced that both of the people eligible to cast ballots for the creation of a Fresh Water Supply District in Roberts County endorsed the plan in the election.^[19]

Water rights

Pickens has recently begun buying up subsurface water rights in Texas. Pickens' new company, Mesa Water, bought ground water rights for 200,000 acres (800 km²) in Roberts County, Texas for $75 million and over a 30-year period expects to make more than $1 billion on his investment. Pickens wants to take the water from the Ogallala Aquifer and pump it to El Paso, Lubbock, San Antonio or Dallas-Fort Worth. [11] On November 6, 2007 voters will go to the polls to seat a five-member board of supervisors and to approve $101 million in revenue bonds to acquire rights-of-way for delivering water and wind-generated electricity.^[20] Just two people, Pickens' ranch manager Alton Boone and his wife Lu, will cast ballots to confirm the creation of a Fresh Water Supply District in Roberts County as they are the only residents who live within the eight-acre water district and are its only eligible voters.^[20]

Swift Boat challenge

Main article: Swift Boat challenge

In November 2007, Pickens offered a million dollars to anyone who could disprove even a single charge made in the advertisements placed by the Swift Boat Veterans group he had supported in 2003.^[21] John Kerry, whose record of military heroism was the target of the group's ads, sent Pickens a letter saying he accepted the challenge^[21]. In response to Kerry's acceptance of the challenge, Pickens alleged that the only way for Kerry to disprove the advertisements was to release all records and private journals from the 8 years after the events in question. Additionally, Pickens countered that Kerry ought to forfeit the sum of $1 million should he fail to prove anything stated in the ads as false.

Personal life and interests

Pickens lives in the Preston Hollow neighborhood of north Dallas and owns a ranch along the Canadian River in the Texas Panhandle. He is married to Madeleine Pickens, widow of renowned Thoroughbred racehorse owner Allen E. Paulson. Pickens and his wife are self professed animal rights advocates. He is currently lobbying for the American Horse Slaughter Prevention Act (HR 503) which will prohibit the slaughter of 100,000 horses for human consumption and the trade and transport of horseflesh and live horses intended for human consumption.^[22] Pickens was divorced from Beatrice Carr and from Lynn O'Brien. Pickens has five children and twelve grandchildren.[12] One of Pickens' sons, Michael O'Brien Pickens, was arrested and charged with securities fraud, a "pump and dump" scam using junk faxes, in July 2005.^[23] Michael pled guilty in October 2006.^[24] On December 20, 2007 Reuters reported that Michael O'Brien Pickens was sentenced to five years of probation and ordered to take part in a substance abuse program.^[25] Pickens was also was ordered to pay restitution of $1.2 million in connection with the fraud.^[25] T. Boone Pickens attended the sentencing hearing in U.S. District Court in Manhattan and said he would pay the restitution.^[25] "Because of Mike's courageous efforts in treatment and because I wanted to clear our family's name by making the victims whole, I have made full restitution on behalf of Mike," said T. Boone Pickens.^[25] "I am thankful that it has forced Mike to truly confront his demons for the first time in his life," he said.^[25]