Legendary oilman and corporate raider T. Boone Pickens Jr. is facing the fight of his life. Now, though, in an odd twist, he's the target. Pickens, whose fortunes have been ebbing ever since the late 1980s, may soon have to deal with a nasty proxy fight for control of Mesa Inc., his flagship oil-and-gas company. He could end up with a stripped-down company--or none at all.

The aggressor: none other than David H. Batchelder, a steely takeover artist who masterminded Mesa's widely publicized assault on Phillips Petroleum Co. and others in the 1980s before quitting Mesa in 1988. Batchelder is particularly interested in the fate of Mesa's prime holdings in the Hugoton gas fields in Kansas, Mesa's chief asset. He apparently thinks he can break up and sell Mesa--whose stock closed on Mar. 29 at 6 a share--and get 10 or more. "These are clearly the trophy properties to come on the market in the last 10 years," says Batchelder. His client, Montana investor Dennis R. Washington, accumulated 4.5% of Mesa stock toward the end of last year at an average price less than 51/4 and filed with the Securities & Exchange Commission for permission to acquire as much as 49%. Batchelder also moved to nominate three directors, including himself, to Mesa's seven-member board. The fireworks could start shortly. Batchelder is said to be preparing proxy filings, and a showdown could come as early as Mesa's May 17 annual meeting.

The 66-year-old Pickens declined to be interviewed for this article, but he told BUSINESS WEEK in a brief conversation on Mar. 27 that he was not concerned about a possible proxy contest.

Pickens, though, apparently feels that he can fend off a proxy battle by selling his Hugoton gas fields to pay off $1.2 billion in debt that he incurred in the 1980s to acquire properties based on a then-rosy gas-price outlook. Since that time, prices have tumbled, along with Pickens' net worth and Mesa's stock. Mesa stock has fallen from a high of 911/4 in 1986 to 35/8 last year. Pickens is betting that a major oil company will solve his problem by paying $1.2 billion for the Hugoton properties. One major outfit is said to have offered more than $900 million, but Pickens' friends say he won't entertain any bids that don't allow him to clean up his balance sheet. If he succeeds, however, Mesa, which has been losing money and reserves for years, could emerge smaller but healthier--and independent.

But the betting in the oil fields is that he won't get his price. Indeed, most would-be buyers value Mesa's Hugoton reserves and other assets at about $960 million, not $1.2 billion. Such a sale would still leave Mesa saddled with nearly $300 million in debt but without the fields that now contribute two-thirds of production. Mobil Corp. Chief Executive Officer Lucio A. Noto has expressed interest "at the right price." But others, including Phillips Chairman W. Wayne Allen, have decided not to bid. Even if Pickens doesn't get his price, Mesa won't face bankruptcy. In 1993, Mesa postponed that possibility by deferring repayment on about half of the $1.2 billion debt until 1998.

Pickens' survival and Batchelder's success both depend to one degree or another on a fairly optimistic view of gas prices, one that is not universally shared. Says Apache Corp. CEO Raymond Plank: "Batchelder has to be betting gas prices will improve--and everyone who has believed that over the past five years has had the privilege of losing money."

NOTHING TO LOSE. Batchelder is in a decidedly better position than Pickens--and he seems to think he can win big without sharply higher prices. His strategy is apparently two-pronged: One possibility is that Pickens could fail to get his price for the field and refuse to sell--so then Batchelder would seize control, shop the field aggressively, reduce debt service, and cut overhead, including Mesa's jet. On the other hand, if Pickens' sale succeeds, Batchelder apparently thinks he can profit by pressuring Pickens to do everything he would do anyway. At worst, analysts think he could back out without taking losses. Batchelder declined to comment publicly on his plans.

Whatever the case, the looming battle is attracting many stock speculators. Investors, including Pickens himself, have in recent months boosted the Mesa stock price by 50%, to 6, in heavy trading. Michael R. Spohn, research director at J.S. Herold Inc., thinks Batchelder's strategy could work. But he adds: "I'd have no interest [in Mesa] if there were no raiders."

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