Harold Hamm, the billionaire founder and chairman of Continental Resources, has upped his offer to take the shale oil giant private. Hamm's decision to pay more for the company comes as both U.S. crude oil and natural gas futures have fallen from highs earlier in the year. Continental Resources stock advanced Monday.
Continental Resources announced Monday it has entered into a merger agreement with Hamm who is now offering $74.28 per share, up from his initial offer of $70 per share in June. The new offer price represents a 15% premium to the closing price $64.50 on June 13, 2022, the day before Hamm made his initial offer buy out the company.
Continental Resources stock rose 8.6% Monday during market trading to 74.09, after closing Friday down 3% at 68.22 on Friday.
U.S. crude oil traded around $85.40 per barrel Monday. Meanwhile U.S. natural gas futures sank 7.4% to below $6 per million British thermal units. Energy giant BP also announced Monday it had entered a deal to buy Archaea Energy, which captures landfill and agricultural waste gas, for around $4.1 billion.
Continental Resources Stock Ownership
The Hamm family currently holds approximately 83% of total outstanding CLR shares. Hamm is now offering around $4.3 billion to purchase the remaining 58 million shares, according to Continental Resources. Hamm's offer price values the company at more than $25 billion.
Hamm founded the Oklahoma City-based oil producer in 1967. He took the company public in 2007, in order to fund its development fracking boom underway in the Bakken Shale oil fields in Montana and North Dakota. The Bakken has grown to become one of the most robust oil-producing regions in the U.S.
As a result, the majority of CLR's revenue and production comes from oil fields in the northern U.S. It is the largest leaseholder and the largest producer in the Bakken. Continental is also the largest producer in the Anadarko Basin of Oklahoma. It has also newly acquired positions in the Powder River Basin of Wyoming and the oil-rich Permian Basin of Texas.
Hamm's move is significant, in part, because publicly held U.S. oil and gas producers have been reluctant to increase production as oil and gasoline prices have climbed. Producers have increased spending in order to hold production steady as labor and material costs have climbed. But excess capital has been directed to share buybacks and dividends, benefiting shareholders and lenders, rather than on increasing production. Meanwhile, smaller and privately held companies have increased their output substantially.
In 2019, Hamm stepped down as CEO and was replaced by longtime board member William Berry.
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