Business

Shale pioneer Harold Hamm takes private ownership of Continental Resources


Shale billionaire Harold Hamm has reached an agreement to buy all of Continental Resources, valuing the equity of the American oil producer he founded at around $27 billion.

Move to full privatization Continent marks an attempt by one of the most influential figures in the US energy industry to escape pressure from Wall Street and start pumping more oil.

“We have all felt the limits of going public over the past few years, and in times like these, when the world is in dire need of what we produce, I have never been more optimistic,” said Hamm. said in a note to staff.

The shale The tycoon said privatization would give the company “freedom to explore” to get more oil and grow “as we do our part to help ensure America’s energy independence without any problems.” any obstacle”.

This transaction will give Hamm and his family full ownership of Continental, which he establish in 1967 and went public in 2007 as the Oklahoma City-based company emerged at the forefront of the US shale energy revolution.

Continental is the largest oil producer in the Bakken shale fields in the US states of North Dakota and Montana and over the past year has expanded into the Wyoming and Permian Basin of Texas and New Mexico.

Hamm agreed to pay $74.28 a share in cash to buy 17% of Continental, which his family did not yet own. Monday’s $4.3 billion offer represents a 13% premium to Continental’s closing price in mid-June, before he placed his first bid on the company at $70 a share. Shares of Continental were up 8.5% to about $74 per share at noon in New York.

However, the transaction will be financed entirely with Continental’s existing money on its balance sheet and debt, meaning Hamm will not be spending any more of its own money.

The deal was approved by Continental’s board but was met with immediate opposition from a leading shareholder, who argued that Hamm’s new price was tantamount to “stealing” the company’s assets. company.

Cole Smead, president of Smead Capital Management, Continental’s largest shareholder after the Hamm family, told the Financial Times the new offer still undervalues ​​the property and said the board’s approval was like a “back door deal”.

“It was like playing an away basketball game in a small town in the middle of nowhere,” says Smead. “No calls will go your way because referrals are not on your side. Where I go, we call these people ‘hosts’. I assume they call them the same in Oklahoma.”

Hit hard by the slumping oil demand in the early days of the coronavirus crisis in 2020, Continental’s fortunes have since spiked as energy consumption rebounded and crude prices rose since Russia invade Ukraine. In June, Hamm said the delisting was in Continental’s best interests.

Analysts say Hamm’s expansion and move into private also reflects his view that oil demand will continue to grow despite growing environmental concerns and investor skepticism. about the lifespan of fossil fuels.

Andrew Gillick, strategist at consulting firm Enverus, said: “Hamm is just acting on his belief that the energy transition will be slow and oil shortages due to war and politics. value doesn’t match Wall Street’s wishes for shale producers.

news7h

News7h: Update the world's latest breaking news online of the day, breaking news, politics, society today, international mainstream news .Updated news 24/7: Entertainment, Sports...at the World everyday world. Hot news, images, video clips that are updated quickly and reliably

Related Articles

Back to top button