High Times for T. Boone Pickens

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Pickens named one major discovery, a 1975 North Sea strike, after his new wife, Beatrice. The daughter of a rancher and the mother of four children by a previous marriage, she and Pickens first met as college students in Oklahoma. She married one of Pickens' fraternity brothers, but they divorced in 1969. Pickens describes his life with Beatrice as "the perfect deal." She is almost as sure a shot as Pickens (an award-winning marksman), with whom she likes to hunt quail. A skilled horsewoman, she is also deeply interested in her husband's work. The year they were married, 1972, she enrolled in a geology course at Amarillo College and earned an A.

In the early 1980s, Pickens began searching for riches on Wall Street, where one of the great roller-coaster rides in history was turning oil stocks into a bargain. Shares of the major petroleum producers had climbed sharply after 1979, when the Organization of Petroleum Exporting Countries nearly tripled the cost of oil. But then the price began dropping after 1982 as a world glut of oil developed. U.S. energy reserves, meanwhile, were dwindling. Pickens realized that oil company stocks were undervalued, and that it was both easier and smarter to get new oil reserves by taking over a company than by drilling for more oil. Says he: "It has become cheaper to look for oil on the floor of the New York Stock Exchange than in the ground."

Pickens was also devising the tactics that today make his raids akin to a declaration of war. Mesa analysts first study a prospective target in minute detail. "By the time my guys get through with the numbers," Pickens says, "we know those companies better than they know themselves." The team spends months sifting reams of public documents, including the annual reports and other resources kept in Mesa's extensive library of the U.S. petroleum industry. The researchers focus on a firm's domestic oil and gas reserves and feed their data, along with such matters as projected interest rates and energy prices, into a computer.

Pickens moves with cloak-and-dagger stealth once he decides which firm to attack. Only a few Mesa insiders like Financial Vice President David Batchelder, 35, know the target. To keep its identity secret, Pickens gives it a code name (Gulf was "Barrel Cactus," for a plant in Pickens' office), which he uses while accumulating the company's stock. Money for the purchases is funneled in chunks of up to $50 million to Broker Alan Greenberg at the Wall Street firm of Bear, Stearns, and to other securities houses. Pickens transfers the huge sums from numbered bank accounts around the country through a system of prearranged signals. A Mesa officer starts the process by telephoning a bank and giving a code word to an appointed employee. That person then calls a second Mesa executive to confirm the transaction.

Despite such precautions, rumors cropped up last month that the Securities and Exchange Commission was investigating whether Pickens gave friends in Amarillo advance word of his campaigns to enable them to buy the stock of target companies before it jumped in value. Pickens strongly denies that and says that the SEC "has never questioned me about insider trading."