Shale producer Continental Resources says that it has received an all-cash buyout proposal from billionaire-founder Harold Hamm’s family trust, which valued the company at $25.41 billion.
Hamm, a legendary oilman who once called the Organization of the Petroleum Exporting Countries a “toothless tiger”, is offering $70 per share for around 17 percent stake in the company that his family does not own.
The offer represents a nearly 9 percent premium over Continental’s closing price on Monday but is below a near eight-year high of $73.53 that Continental’s shares had traded in the previous week.
Hamm founded Continental as Shelly Dean Oil Company in 1967 and ran it as a private company until 2007. He now owns about 83 percent of its outstanding common shares along with his family members.
In a letter to employees detailing his go-private offer, Hamm lamented that the public markets have not supported the oil and gas industry and limited its growth, especially since the coronavirus pandemic.
In his letter Hamm said: “We have determined that the opportunity today is with private companies who have the freedom to operate and are not limited by public markets.”
Continental’s shares rose 7.3 percent to $69.20 in premarket trading following the offer, which comes as the company expands into the Permian basin, the heart of US shale, amid a surge in oil prices after Russia’s invasion of Ukraine.
Prices have hit triple digits as the conflict has disrupted supply chains at a time when fuel demand is rising on a rebound in global travel, revitalizing the shale industry’s prospects.
Continental said it would form a special committee of independent directors to consider Hamm’s proposal.
If the proposal is rejected, the Hamm family will continue as long-term shareholders and would not push for any strategic options, according to Hamm’s offer letter.
For more information visit www.clr.com
