Founder Harold Hamm offers to take Continental Resources private in $25 billion deal

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% stake in the company that his family does not own.

The offer represents a nearly 9% 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% 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.

“We have determined that the opportunity today is with private companies who have the freedom to operate and are not limited by public markets,” Hamm said in the letter.

Continental’s shares rose 7.3% to $69.20 in premarket trading following the offer, which comes as the company expands into the Permian basin, the heart of U.S. shale, amid a surge in oil prices after Russia’s invasion of Ukraine.

Prices have hit triple digits as the conflict disrupted supply chain 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.