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T. Boone Pickens Generates Billions in Value Creation through Energy

Shawn Baldwin Analyzes T. Boone Pickens Methods

T. Boone Pickens Generates Billions in Value Creation through Energy
Shawn Baldwin with T. Boone Pickens at BP Capital’s offices Shawn Baldwin Images

Born in Holdenville, Oklahoma in 1928 as Thomas Boone Pickens, Jr. but known through out the world as T. Boone. “Pick” is an American tycoon who rose to prominence by acquiring oil and gas companies throughout the 1980s. Before entering the oil business, Pickens attended Oklahoma A&M where he graduated with a degree in geology. Shortly thereafter, he began his career working at Phillips Petroleum. He stayed with Phillips until 1954, and in 1956 he founded his company Mesa Petroleum.

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As the founder of Mesa Petroleum, Pickens spent the decade acquiring and attempting to takeover various oil and gas companies. His first major acquisition came in 1981, when Mesa, already one of the largest independent oil companies in the world, took over the Hugoton Production Company, a company 30 times the size of Mesa. After this successful acquisition, Pickens spent much of the 1980s attempting to acquire other oil and gas companies, including attempted buyouts of Cities Service, Gulf Oil, Phillips Petroleum, and Unocal. His more successful bids included the acquisitions of Pioneer Petroleum and Tenneco. While his bids were not always successful, he managed to make a significant amount of money from his takeover bids through his sale of stock. Near the turn of the century, Pickens eventually founded BP Capital Management, a hedge fund that invests in traditional energy and nuclear power companies, such as Halliburton. He owns a 46% interest in the company, which runs two hedge funds.

Most know the flamboyant oil man turned hedge fund manager for market calls and prognostications in energy. His latest venture is tied to energy but helps to invigorate America. In his latest venture Boone focuses on pushing the automotive industry forward with natural energy cars. Extensive value creation can be built in related areas that are tied to an industry that individuals have deep knowledge of and can then innovate.

Pickens has also taken an interest in politics and the environment. During the 1988 Presidential election, he briefly considered running. Since 1980 he has made over $5 million in contributions to various candidates and groups, including George W. Bush, Swift Vets and POWS for Truth, Progress for America, Rudy Giuliani, and 527 other Republican groups. He once famously offered a $1 million to anyone able to disprove the claims made in political ads by Swift Vets against then candidate John Kerry. One of the striking things you notice as you enter Boone’s office is that he has pictures with every American President at the White House and at formal dinners.

Although his company deals primarily with traditional energy sources, Pickens is a proponent of alternative energy. He believes that the world’s oil production is on the decline, and thus champions the use of domestic natural gas and solar and wind power. In 2008 he proposed a major energy policy, the Pickens Plan. The plan called for a major reduction of dependency on foreign energy, the introduction of alternatives to oil, and the conversion of the nation’s commercial transport sector from OPEC diesel to natural gas.

When I met with Boone he outline three tenets he thought were necessary for success:

1. Drive Desire

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2. Commitment

3. Play in a Big Game

He frequently donates to various charities and organizations, and has given away more than an estimated $700 million to charity, $500 million of which has gone to his alma mater, Oklahoma State University. He has also committed to The Giving Pledge. Today, Pickens holds an estimated net worth of $1.2 billion.

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About the author

Shawn D. Baldwin is Chairman of the AIA Group (AIA), an alternative investment and advisory firm based in Chicago

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