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Shale oil pioneer Harold Hamm takes company private ‘to maintain our competitive edge’

Harold Hamm cited a 'lack of support from the public market' for oil-and-gas companies.
by WorldTribune Staff, June 15, 2022

Harold Hamm, who played a pioneering role in the shale boom that led to U.S. energy independence during the Trump administration, is looking to take Continental Resources Inc. 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.

"Hamm 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," the Wall Street Journal noted in the June 14 report.

Hamm had noted recently that the publicly traded Continental didn’t have the same flexibility as private oil producers in deciding how much oil they can pump. Most public shale companies, the Journal noted, "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, 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,” 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.

Related: Harold Hamm: Get ready for $6 a gallon gas and doubled electric bills if Biden wins, October 20, 2020

Hamm's 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. Following Hamm's announcement, Continental Resources (ticker: CLR) stock surged almost 15% to $73.64 on Tuesday.

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.

A spokeswoman for Continental told the Journal the company would make no further comment beyond public filings.

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