“The First Billion Is the Hardest” (Crown Business. 252 pages. $26.95), by T. Boone Pickens
T. Boone Pickens deals in big figures. Very big. He quotes Forbes Magazine as pegging his worth at $3 billion in 2007, when he was 79.
Now he wants to save the United States hundreds of billions every year by cutting its appetite for imported oil, which made billions for Pickens during his long career.
At 28, he helped found Mesa Petroleum, which became one of the biggest independent oil companies. His two partners put in a total of $2,500. He got a half share for just a promissory note in the same amount. Eight years later, the firm took over Hugoton, a company that owned a large portion of the biggest U.S. natural gas field.
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“In a few weeks our activities upgraded the market value of Hugoton from $77 million to $137 million, an all time high,” he writes. He was on the road to that first billion.
His road map provides a lot of good old-fashioned advice such as working hard and keeping up with the news. There's less on producing actual fuel than on big bold trades in stocks and in pieces of paper that represent millions of gallons.
For the small investor, his map doesn't trace the long and elusive trail to that first billion. But he does insist that executives who make the big deals ought to own substantial blocks of shares. He says that should motivate them to profit stockholders as well as themselves.
Pickens was frozen out of management at Mesa's successor, Pioneer. He'd been with the firm 40 years. After he left, he still had five of its key employees, the Mesa name, two of its subsidiary businesses, $5 million in severance pay — which he seems to consider paltry — and the largest individual block of shares. He soon sold them at the top of the market.
He estimates that from 1997 to 2007 Pioneer made a profit of $900 million. His new firm, BP Capital Management, made $8 billion between 2000 and 2007 and had no debt.
“The week before I left Mesa, I had undergone a colonoscopy, moved out of my home, and filed for divorce,” the book says. “Losing Mesa hurt the worst.”
Though he calls the divorce “nasty,” the chief consequence he mentions is that he had to share custody of Winston, a toy spaniel. (The breed is called “papillon” — French for “butterfly” — because of its outsize ears.) Eventually, he decided the arrangement was bad for Winston, gave him up entirely and got a new papillon.
He remarried in his late 70s.
Pickens' account of his private life emphasizes his new wife — she leased a Boeing 737 to rescue dogs in the Katrina flood — and his extensive contributions toward financing sports at his alma mater, Oklahoma State.
At 80, he's working now on the biggest deal of his life: a wind project. It calls for investors to put up $10 billion and lease 400,000 acres in five Texas counties, with an expected return of 15 percent a year.