The real Boone Pickens story
The real Boone Pickens story is not that he headed Mesa Petroleum and in its expansion program during the 1980s reformed the relationship between shareholders and corporate executives. No, it is that during his life Mr. Pickens has experienced extraordinary setbacks and has always come back.
People who have the resilience to overcome significant setbacks in their careers deserve special admiration and respect. Among political leaders, Abraham Lincoln is perhaps the best example — overcoming election losses and personal tragedies to become one of our most revered presidents.
Richard Nixon was elected and re-elected vice president, lost a presidential race by a smidgen, lost the California gubernatorial race, rebounded by being elected and re-elected president, resigned in disgrace and then came back as a senior statesman and author of important books. Bill Clinton (the “comeback kid”) was elected governor of Arkansas, lost a bid for re-election, won again, addressed the Democratic Convention in 1988 and was almost hooted off the stage, was elected and re-elected president, was impeached, though not con- victed, and is now a popular and respected oracle.
John McCain flew jets off carriers, was shot down, imprisoned and tortured, then elected to the House and later the Senate, and is now the presumptive Republican nominee for president.
Boone Pickens has had a rollercoaster ride as well, judging from his new semi-autobiographical book, “The First Billion is the Hardest.” In candid, often earthy, language, Mr. Pickens describes the ups and downs of his career, the reasons for his failures as well as his successes, what he has learned about both, and why, at age 80, he is just finding his groove.
The only child of strong parents of modest means, young Boone lands a basketball scholarship at Texas A&M, loses it after his freshman year (“too short, too slow”), gets into what is now Oklahoma State University, graduates with a degree in geology, takes a respectable, though dead-end, job at Phillips Petroleum, cashiers the job to become a consulting geologist (living in his car while on the road), scrapes up a couple thousand dollars and, with two friends holding minority interests, establishes what would become Mesa Petroleum.
Mesa prospers and becomes the largest independent oil company in the United States. But it is running out of reserves. Seeing little opportunity to drill for more, Boone shops for reserves on Wall Street, making offers for underpriced oil companies. This leads to hostile takeover attempts for Cities Service, Gulf Oil, Phillips Petroleum and Unocal during the early 1980s. None results in an actual acquisition, but in each case Mesa walks away with substantial gains on its holdings in the companies.
Boone, of course, becomes an instant celebrity as a “corporate raider” — and becomes persona non grata among executives in the industry. Rankled by the arrogance of executives seeing the companies by whom they are employed as “their” companies instead of the stockholders’ companies, Mr. Pickens establishes United Shareholder Association, which builds on the firestorm Boone has ignited and helps bring about significant reforms that strengthen stockholder rights.
By the mid-1990s, however, Mesa falls on really hard times. Boone invites a friend to inject equity into the company, the result of which is that in 1996 Boone is muscled out as chairman/CEO and quietly leaves the firm he had founded. Taking his severance, he establishes BP Capital, calls on his friends to invest funds, and sets up shop to trade in commodities — but only after failing the commodity pool operator twice! The results are well nigh disastrous. In the late 1990s, Boone goes short on natural gas, expecting price to fall; instead, it rises. Boone is making mistakes. He is down, not only financially, but psychologically. Fortunately, friends get him help for undiagnosed depression.
Boone comes back. In 2000, he bets long on natural gas at a time when output is constrained, and demand, because of forecasts of extremely cold weather during the coming winter, rises dramatically. Boone rides price up and goes short just at the peak. The result is an enormous gain for BP Capital and a resurgence of Boone Pickens.
In the years since, BP Capital has thrived. So has other of his enterprise initiatives, including Clean Energy Fuels, the largest retailer of natural gas for vehicles in America.
Boone is on several missions. He has worked himself into the best physical and mental shape of his career. He works out intensely almost daily, and a recent article in Forbes magazine — “Inside Boone’s brain” — concludes he has the brain of much younger man. He strives to be a highly successful “coach” of his team at BP Capital. He is giving most of his money away — in excess of $300 million to the athletic program at Oklahoma State University, $100 million to the University of Texas System, and $10 million to the Reagan Library are the most well-known endowments, but there are many others.
Finally, Boone is on a mission to change U.S. energy policy. He decries spineless politicians who talk about energy independence but do little about it. Boone says we should transfer to vehicles the natural gas presently fueling 30 percent of electric power generation in the United States. Then, use wind and solar power to replace the shortfall in power generation. That’s just for starters. His other proposals can be found at PickensPlan.com. With his own money, he has undertaken a $58 million promotion campaign to end our dependence on foreign oil.
And when Boone Pickens sets his mind to something, anything can happen!
James C. Miller III, budget director for President Reagan, serves with T. Boone Pickens on the board of Clean Energy Fuels (CLNE).