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.
Boone Pickens quail hunting on Mesa Vista Ranch. | Handout: Mesa Vista Ranch
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.
Boone Pickens, Chairman, BP Capital Management | Adam Jeffery | CNBC
“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.
Source: Birney Lettick
“He was Gordon Gekko before ‘Wall Street,’ and his influence was profound,” The New York Times’ David Gelles wrote in a January 2018 profile, referring to the villain in Oliver Stone’s 1987 movie.
As a corporate raider, Pickens was a leader of the budding “shareholders rights” movement. He founded the United Shareholders Association in 1986 to pressure corporate leaders “to give the companies back to the owners, which are the shareholders.”
“I have always believed that maintaining the status quo inevitably leads to failure,” Pickens wrote in a September 2017 column for Forbes. “Back then, the notion that shareholders own the companies and managements were employees was foreign to big oil companies that would rather operate like empires. I was hell-bent on shaking things up. I was a disrupter before disrupters were cool.”‘Halftime’ at age 68
In 1996, at age 68, Pickens sold Mesa, but rather than retire, he started a new business, BP Capital Management, a hedge fund focusing on the energy industry. (BP stands for his name, not British Petroleum.)
T. Boone Pickens, founder and chief executive officer of BP Capital LLC. | Andrew Harrer | Bloomberg | Getty Images
“For most people, that would have been the end. For me, it was halftime,” he wrote in the Forbes column.
The hedge fund managed billions of dollars for investors until Pickens closed it in January 2018 because of his declining health.
A year after starting the hedge fund, he formed Pickens Fuel Corp. in 1997, promoting natural gas as an alternative to gasoline. In 2007, he spent $100 million of his own money to launch the Pickens Plan, a campaign with the goal of declaring U.S. energy independence.
The same year, the oilman announced plans to build the world’s largest wind farm — 4,000 megawatts — in the Texas Panhandle, but subsequent low natural gas prices helped to derail the plans. He turned his focus to getting Congress to offer incentives for conversion of trucks from diesel to compressed natural gas.
“I’m all American,” Pickens said. “Any energy in America beats importing.”‘Yes, I’m for Donald Trump’
During Bush’s 2004 re-election campaign, Pickens helped finance the “Swift Boat Veterans for Truth” campaign that questioned John Kerry’s Vietnam War record and helped undermine the Democrat’s presidential bid.
He backed Republican Rudy Giuliani in 2008 and Donald Trump in 2016.
“Yes, I’m for Donald Trump,” Pickens declared in May 2016. “I’m tired of having politicians as president of the U.S. Let’s try something different.”
He supported Trump’s withdrawal from the Paris climate accord and his attempts to restrict visitors from predominantly Muslim countries from entering the United States.
“I’d cut off the Muslims from coming into the United States until we can vet these people,” he said. “Cut them off until we can figure out who they are.”
Aside from Republican politics, Pickens was a benefactor of numerous organizations, including the University of Texas Southwestern Medical Center in Dallas and the M.D. Anderson Cancer Center in Houston ($50 million each in 2007). His $165 million donation to his OSU’s athletic department helped fund the stadium renovation. The school named the complex Boone Pickens Stadium to thank him for what it said was the largest single donation ever to any university athletic department.
On Valentine’s Day 2014, the 85-year-old Pickens married Toni Brinker, widow of Dallas restaurateur Norman Brinker, in a small ceremony in the Mesa Vista family chapel. His four previous marriages ended in divorce. She survives him, as do three daughters and two sons from previous marriages.
Days after Pickens suffered “a Texas-sized fall” in July 2017, he wrote a LinkedIn post titled “Accepting (or Embracing) Mortality.”
“Now, don’t for a minute think I’m being morbid,” he wrote. “Truth is, 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. There’s a story I tell about the geologist who fell off a 10-story building. When he blew past the fifth floor he thought to himself, ‘So far so good.’ That’s the way to approach life. Be the eternal optimist who is excited to see what the next decade will bring.”
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In 2021, the makeup of renewables has also changed drastically. Technologies such as solar and wind are no longer novel, as is the idea of blending vegetable oils into road fuels or switching to electric-based vehicles. Such ideas are now entrenched and are not considered enough to shift the world into a carbon neutral future. The new wave of renewables focus on converting by-products from other carbon-intensive industries into usable fuels. Research into such technologies has been pioneered in universities and start-ups over the past two decades, but the impetus of global climate goals is now seeing an incredible amount of money being poured into them as oil & gas giants seek to rebalance their portfolios away from pure hydrocarbons with a goal of balancing their total carbon emissions in aggregate to zero.
Traditionally, the European players have led this drive. Which is unsurprising, since the EU has been the most driven in this acceleration. But even the US giants are following suit. In the past year, Chevron has poured an incredible amount of cash and effort in pioneering renewables. Its motives might be less than altruistic, shareholders across America have been particularly vocal about driving this transformation but the net results will be positive for all.
Chevron’s recent efforts have focused on biomethane, through a partnership with global waste solutions company Brightmark. The joint venture Brightmark RNG Holdings operations focused on convert cow manure to renewable natural gas, which are then converted into fuel for long-haul trucks, the very kind that criss-cross the vast highways of the US delivering goods from coast to coast. Launched in October 2020, the joint venture was extended and expanded in August, now encompassing 38 biomethane plants in seven US states, with first production set to begin later in 2021. The targeting of livestock waste is particularly crucial: methane emissions from farms is the second-largest contributor to climate change emissions globally. The technology to capture methane from manure (as well as landfills and other waste sites) has existed for years, but has only recently been commercialised to convert methane emissions from decomposition to useful products.
This is an arena that another supermajor – BP – has also made a recent significant investment in. BP signed a 15-year agreement with CleanBay Renewables to purchase the latter’s renewable natural gas (RNG) to be mixed and sold into select US state markets. Beginning with California, which has one of the strictest fuel standards in the US and provides incentives under the Low Carbon Fuel Standard to reduce carbon intensity – CleanBay’s RNG is derived not from cows, but from poultry. Chicken manure, feathers and bedding are all converted into RNG using anaerobic digesters, providing a carbon intensity that is said to be 95% less than the lifecycle greenhouse gas emissions of pure fossil fuels and non-conversion of poultry waste matter. BP also has an agreement with Gevo Inc in Iowa to purchase RNG produced from cow manure, also for sale in California.
But road fuels aren’t the only avenue for large-scale embracing of renewables. It could take to the air, literally. After all, the global commercial airline fleet currently stands at over 25,000 aircraft and is expected to grow to over 35,000 by 2030. All those planes will burn a lot of fuel. With the airline industry embracing the idea of AAF (or Alternative Aviation Fuels), developments into renewable jet fuels have been striking, from traditional bio-sources such as palm or soybean oil to advanced organic matter conversion from agricultural waste and manure. Chevron, again, has signed a landmark deal to advance the commercialisation. Together with Delta Airlines and Google, Chevron will be producing a batch of sustainable aviation fuel at its El Segundo refinery in California. Delta will then use the fuel, with Google providing a cloud-based framework to analyse the data. That data will then allow for a transparent analysis into carbon emissions from the use of sustainable aviation fuel, as benchmark for others to follow. The analysis should be able to confirm whether or not the International Air Transport Association (IATA)’s estimates that renewable jet fuel can reduce lifecycle carbon intensity by up to 80%. And to strengthen the measure, Delta has pledged to replace 10% of its jet fuel with sustainable aviation fuel by 2030.
In a parallel, but no less pioneering lane, France’s TotalEnergies has announced that it is developing a 100% renewable fuel for use in motorsports, using bioethanol sourced from residues produced by the French wine industry (among others) at its Feyzin refinery in Lyon. This, it believes, will reduce the racing sports’ carbon emissions by an immediate 65%. The fuel, named Excellium Racing 100, is set to debut at the next season of the FIA World Endurance Championship, which includes the iconic 24 Hours of Le Mans 2022 race.
But Chevron isn’t done yet. It is also falling back on the long-standing use of vegetable oils blended into US transport fuels by signing a wide-ranging agreement with commodity giant Bunge. Called a ‘farmer-to-fuelling station’ solution, Bunge’s soybean processing facilities in Louisiana and Illinois will be the source of meal and oil that will be converted by Chevron into diesel and jet fuel. With an investment of US$600 million, Chevron will assist Bunge in doubling the combined capacity of both plants by 2024, in line with anticipated increases in the US biofuels blending mandates.
Even ExxonMobil, one of the most reticent of the supermajors to embrace renewables wholesale, is getting in on the action. Its Imperial Oil subsidiary in Canada has announced plans to commercialise renewable diesel at a new facility near Edmonton using plant-based feedstock and hydrogen. The venture does only target the Canadian market – where political will to drive renewable adoption is far higher than in the US – but similar moves have already been adopted by other refiners for the US market, including major investments by Phillips 66 and Valero.
Ultimately, these recent moves are driven out of necessity. This is the way the industry is moving and anyone stubborn enough to ignore it will be left behind. Combined with other major investments driven by European supermajors over the past five years, this wider and wider adoption of renewable can only be better for the planet and, eventually, individual bottom lines. The renewables ball is rolling fast and is only gaining momentum.
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