Fracking Pioneer Harold Hamm Moves to Take Continental Resources Private
Harold Hamm,
the billionaire fracking pioneer who helped launch the U.S. shale boom, is looking to take
Continental Resources Inc.
CLR 14.11%
private, offering about $4.3 billion in cash to buy the portion of the company’s shares he and his family don’t already own.
Mr. Hamm, 76, and other members of his family collectively hold about 83% of Continental, the Oklahoma City-based oil producer he ran for decades as chief executive, fueling a shale-drilling bonanza in the Bakken Shale of North Dakota which is today one of the largest U.S. oil-producing regions.
His offer of $70 a share represents a premium of about 9% over the company’s share price as of Monday and would value Continental at about $25.4 billion.
The company said its board plans to establish a special committee consisting of independent directors of the board to consider the proposal. The board expects that the special committee will retain independent advisers, including independent financial and legal advisers, to assist it in this process, the company said.
Continental shares were up 14% to $73.84 in early trading Tuesday.
While most of Continental’s publicly traded oil-company peers are owned by multiple institutional investors, Mr. Hamm, the 13th child of Oklahoma sharecroppers, has retained control of the company he founded in 1967, holding north of 70% of its shares even after it went public in 2007, according to FactSet.
Harold Hamm helped turn the U.S. into the world’s leading oil producer.
Photo:
Reuters Photographer/REUTERS
The company’s initial public offering had brought Continental funding it would need to exploit the Bakken, as it became one of the first companies to combine hydraulic fracturing and horizontal drilling techniques to tap into once-inaccessible shale rock formations.
Over the years, Mr. Hamm has hinted he could eventually try to take the company private, recently lamenting that his company, as a publicly traded shale driller, didn’t have the flexibility that private oil producers do in deciding how much oil they can pump. Most public shale companies have acquiesced to investors’ demands for capital discipline, spending conservatively this year and focusing on returning more money to shareholders, despite the highest energy prices in more than a decade.
In a statement to employees, Mr. Hamm said it no longer makes sense for Continental to be a publicly traded company, citing “a lack of support from the public market” for oil-and-gas companies, evident in the diminishing number of public shale companies due to acquisitions and bankruptcies, and with some going private.
“We have determined that the opportunity today is with private companies who have the freedom to operate and aren’t limited by public markets,” Mr. Hamm said, in the statement, a copy of which was filed with regulators.
Going private “will enhance our ability to maintain our competitive edge and will also enable us to be even more nimble in our efforts to create value through the drill bit,” he added.
A spokeswoman for Continental said the company would make no further comment beyond public filings.
Mr. Hamm’s offer comes as oil prices have topped $120 a barrel, and as Continental is exceptionally well positioned to take advantage of high prices, as it is among the few shale drillers that typically don’t use hedging contracts to lock-in prices for future production. In the first quarter, Continental collected $598 million in profit, its third-highest quarterly earnings in its history, and its highest quarterly sales of almost $2.3 billion, according to FactSet.
That strategy left Continental vulnerable to low prices during the pandemic. When prices collapsed in March 2020, Mr. Hamm had lost $3 billion in just a few days after Saudi Arabia and Russia flooded the world with crude. Continental took dramatic steps to survive the oil bust, including cutting 70% of its daily output measured by barrels of oil in May 2020.
Continental announced in late 2019 that Mr. Hamm would step down from his CEO role. He was succeeded by current CEO
William Berry,
who had served as a board member since 2014 and remains on the board.
Write to Collin Eaton at [email protected]
Copyright ©2022 Dow Jones & Company, Inc. All Rights Reserved. 87990cbe856818d5eddac44c7b1cdeb8
Harold Hamm,
the billionaire fracking pioneer who helped launch the U.S. shale boom, is looking to take
Continental Resources Inc.
CLR 14.11%
private, offering about $4.3 billion in cash to buy the portion of the company’s shares he and his family don’t already own.
Mr. Hamm, 76, and other members of his family collectively hold about 83% of Continental, the Oklahoma City-based oil producer he ran for decades as chief executive, fueling a shale-drilling bonanza in the Bakken Shale of North Dakota which is today one of the largest U.S. oil-producing regions.
His offer of $70 a share represents a premium of about 9% over the company’s share price as of Monday and would value Continental at about $25.4 billion.
The company said its board plans to establish a special committee consisting of independent directors of the board to consider the proposal. The board expects that the special committee will retain independent advisers, including independent financial and legal advisers, to assist it in this process, the company said.
Continental shares were up 14% to $73.84 in early trading Tuesday.
While most of Continental’s publicly traded oil-company peers are owned by multiple institutional investors, Mr. Hamm, the 13th child of Oklahoma sharecroppers, has retained control of the company he founded in 1967, holding north of 70% of its shares even after it went public in 2007, according to FactSet.
Harold Hamm helped turn the U.S. into the world’s leading oil producer.
Photo:
Reuters Photographer/REUTERS
The company’s initial public offering had brought Continental funding it would need to exploit the Bakken, as it became one of the first companies to combine hydraulic fracturing and horizontal drilling techniques to tap into once-inaccessible shale rock formations.
Over the years, Mr. Hamm has hinted he could eventually try to take the company private, recently lamenting that his company, as a publicly traded shale driller, didn’t have the flexibility that private oil producers do in deciding how much oil they can pump. Most public shale companies have acquiesced to investors’ demands for capital discipline, spending conservatively this year and focusing on returning more money to shareholders, despite the highest energy prices in more than a decade.
In a statement to employees, Mr. Hamm said it no longer makes sense for Continental to be a publicly traded company, citing “a lack of support from the public market” for oil-and-gas companies, evident in the diminishing number of public shale companies due to acquisitions and bankruptcies, and with some going private.
“We have determined that the opportunity today is with private companies who have the freedom to operate and aren’t limited by public markets,” Mr. Hamm said, in the statement, a copy of which was filed with regulators.
Going private “will enhance our ability to maintain our competitive edge and will also enable us to be even more nimble in our efforts to create value through the drill bit,” he added.
A spokeswoman for Continental said the company would make no further comment beyond public filings.
Mr. Hamm’s offer comes as oil prices have topped $120 a barrel, and as Continental is exceptionally well positioned to take advantage of high prices, as it is among the few shale drillers that typically don’t use hedging contracts to lock-in prices for future production. In the first quarter, Continental collected $598 million in profit, its third-highest quarterly earnings in its history, and its highest quarterly sales of almost $2.3 billion, according to FactSet.
That strategy left Continental vulnerable to low prices during the pandemic. When prices collapsed in March 2020, Mr. Hamm had lost $3 billion in just a few days after Saudi Arabia and Russia flooded the world with crude. Continental took dramatic steps to survive the oil bust, including cutting 70% of its daily output measured by barrels of oil in May 2020.
Continental announced in late 2019 that Mr. Hamm would step down from his CEO role. He was succeeded by current CEO
William Berry,
who had served as a board member since 2014 and remains on the board.
Write to Collin Eaton at [email protected]
Copyright ©2022 Dow Jones & Company, Inc. All Rights Reserved. 87990cbe856818d5eddac44c7b1cdeb8
Denial of responsibility! Techno Blender is an automatic aggregator of the all world’s media. In each content, the hyperlink to the primary source is specified. All trademarks belong to their rightful owners, all materials to their authors. If you are the owner of the content and do not want us to publish your materials, please contact us by email – [email protected]. The content will be deleted within 24 hours.