Oil Baron Finds New Buried Treasure - But It's Not Oil
by Chris Mayer
He’s a member of the coveted Forbes 400, with an estimated net worth of over $2.7 billion. The Oklahoma native built a fortune on buried treasure — namely, oil and gas. He is the founder of Mesa Petroleum, which he started for $2,500. In its first year, it netted $435,000 in profits and eventually became a billion-dollar enterprise. He was also involved in a bunch of hostile takeovers of oil and gas companies — Gulf, Phillips and Unocal.
Now 78, the old billionaire has a new buried treasure he’s accumulating — water rights.
Do you have a guess who this cagey guy is? He’s T. Boone Pickens. Yes, that’s T. Boone Pickens. And he’s gobbling up water rights in Texas. Take a look at this from CBS News:
“Pickens’ new company, Mesa Water, has been buying up ground water rights in Roberts County, Texas — 200,000 acres in all. He says that over a 30-year period, he expects to make more than $1 billion on his investment of $75 million.”
Pickens wants to take the water from the Ogallala Aquifer and pump about 200,000 acre-feet of groundwater annually to El Paso, Lubbock, San Antonio or Dallas-Fort Worth – for a price, of course.
This price would depend on how far the water needs to go. El Paso would pay around $1,400 per acre-foot, while Dallas would pay $800 and San Antonio more than $1,000.
Acre-feet, by the way, is a common industry statistic. Basically, an acre-foot of water is the amount of water required to flood a plain of 1 acre to a depth of 1 foot. Generally speaking, 1 acre-foot of water can support two families of four for one year.
Pickens has no qualms about charging people for water and has a ready quip for those who think it wrong to do so. “I know what people say – water’s a lot like air. Do you charge for air? ‘Course not; you shouldn’t charge for water,” says he. “Well, OK, watch what happens. You won’t have any water.”
Pickens is right. Many others are coming to the realization that water is too cheap. Hence, water rights are a great buy today.