Boone Pickens

The 77-year-old iconic Dallas bidnessman on oil and water, making tons of money late in life, and sticking up for the little guy.

by Evan Smith

June 2005

Illustration by Philip Burke

YOU BOUGHT 65,000 SURFACE ACRES of water rights in Roberts County in 2003, adding to the 25,000 acres you already own, and you recently tried to make a deal with ranchers there to buy 94,000 for what would have been the region’s highest average price ever: $455 per acre. Frankly, a lot of people in the Panhandle are wondering what you’re up to. After all, you’re Boone Pickens—you must be working an angle.
I cut two ways up there. There’s no question that they see me as philanthropic. I’ve given a lot to the area, and I haven’t made any money off water rights—zero. On that attempted purchase, I would have been up to a $100 million investment, and I haven’t made a dime. At the same time, I think there’s a little resentment because I moved from Amarillo to Dallas. I mean, I’ve heard the remarks: See how it is to have the big fish make it to the big pond. The point is, I don’t have any resentment. I lived there over forty years. I went to high school there. But there were too many distractions.

Too much focus on you and your business.
I employed a lot of people there, paid taxes, was generous to charities. And now the first thing they say is “He sold gas to the distribution company.”

I think back on the deal we made to merge with Pioneer [a large independent oil-and-gas company], in 1985. [Corporate raider] Irwin Jacobs was going to take it over—he was already the largest shareholder—and they had a weekend before he was going to drop it on them. He said he was going to close it down in Amarillo and move it to Minneapolis, into a warehouse where he had a lot of space. And it was gonna cost Amarillo two hundred or three hundred jobs. So they came to me. We talked about it over the weekend and looked at everything as quickly as we could, but it wasn’t completely analyzed. We paid too much. It was a mistake on our part. Worst deal we ever made.

But, as you say, you did it for the benefit of Amarillo.
Not exactly. I don’t ever want to say that. I make deals to make money. In that case, it cost us to have to look at it quickly. We just made a bad call.

And the thing is, we weren’t jumping up and down to make it. The deal was actually called off, and everybody was leaving Amarillo the next morning. But the lawyers and investment bankers were in the same hotel, and they had a fire alarm. They all ended up in the parking lot at two in the morning. As they’re waiting to see if the building is gonna burn down, it becomes clear that the Pioneer people didn’t fully understand our offer. So they rethought it, talked calmly about it, and called me at four in the morning to tell me that the deal was back on. That’s how we got tagged with a preferred dividend: From 1986 to 1990, we distributed $1.2 billion to our shareholders, and that was really equity in the company. It was a horrible mistake. If we’d never made that deal, we’d have never gotten our dress over our head by 1996, because we owed $1.2 billion.

Hard to put all the genie back in the bottle.
You can’t do it. It’s like unscramblin’ eggs.

Let me try again on the question I asked you earlier. If people misunderstand your motivation, explain it in your words.
To maximize the value of the land owned by ranchers in Roberts County.

Can you really be that selfless?
Well, I’m a rancher up there too, and I also have water rights. I can’t say I’m doing this just for these other people, but it’s almost like the mission’s been assigned to me.

What do you mean?
There’s not anybody else with the resources I have or the knowledge I have. It’s not that they aren’t as smart as I am; it’s just that I happen to have the things necessary to make the deal. I’m in a position to change the true value of the land. Those people have been in that area for a long time. They’ve moved around that country, but they haven’t made any money. They’ve stayed alive. It would be a real shame for them to be sitting there with an asset worth millions of dollars and not take advantage of it.

I was telling those guys up there, “You know, if I change the value of the land from $200 an acre to $700 an acre, you’re talking about $1 billion in a county of about nine hundred people.” I said, “You guys have to give me some recognition.” One of ’em said, “What do you have in mind?” I said, “Maybe a statue, and my name on the county square.” And he said, “Well, it’s not going to be very big.” And another guy said, “Don’t count on bronze.”

It’s fair to say you’re conscious of the good you’re doing.
I thought about it going in. You see, I’ve owned land in Roberts County since 1971. I bought 2,940 acres, all debt, and I’ve added to it since then. My ranch today has 30,000 acres. So I’ve really tried to help the area. Wherever I go, I help. There isn’t any place anybody’s ever found me where I did anything bad to the community.

And yet that’s not what you hear.
I’ve had friends tell people, “What’s he ever done to damage anybody, cost anybody any money? Who’s he ever stiffed?” They can’t come up with anything. The record’s clean. Now, I’m sure that I haven’t done everything that everyone would like me to do. But I’ve never hurt anybody.

I was in a meeting the other day with an oil company that did some work on ranch land that I own and other ranchers own. They have a right to come in, but I told ’em, “You go around in your big trucks and damage the place. I have the resources to analyze the damage, and it’s huge. The contract clearly says that you’ll restore the land to the same level it was before you came in to work on it. You guys like to roll in and roll out and give somebody $5 an acre and say everything’ll come back to what it was, and that isn’t true. I may have your tracks on my land for twenty-five years. That is not restored to the original condition.” So we got to talking with these guys, and they said, “Well, you’ve been where we are,” and I said, “Of course I have. But I’m not operating from that side of the table right now. I’m operating from the landowner’s side of the table, and you guys are not going to be allowed to do this.” And they said, “What are you thinking?” I said, “Well, the company wants to pay $150,000. I think the damages are worth $4 million.” And the guys kind of smiled. “Uh, this is kind of like shareholder’s rights, isn’t it?” I said, “It is.” I get in these things and they start to take on the appearance of a crusade. It isn’t so much the money as it is trying to do something better for the people involved than they’ve had done for them in the past.

You’re right. It does sound like a crusade.
I keep telling ’em we’re gonna have a better county, we’re gonna have better neighbors, we’re gonna work together, we’re gonna help each other. That’s what we need to do. I tell them, “Anytime you have an offer made for an oil or gas lease, communicate it to me. I can tell you the highest price I know of that’s been offered in the county. I know because I paid it.” And so what I do is try to provide some competition for these folks who come in here trying to buy leases for $25 an acre.

Is the problem that ranchers don’t know better?
And they need the money.

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