Harold Hamm, the billionaire executive chairman of Continental Resources Inc., has put forth a nonbinding proposal to acquire for cash all outstanding common shares at a 9% premium to Monday’s closing price to take the largest Bakken Shale producer private.

Continental Resources

At Hamm’s offer price of $70.00/share, the outstanding shares would be valued at about $4.4 billion. Continental is the No. 1 producer in the Bakken Shale and the Anadarko Basin. The independent also is the No. 2 leaseholder in the Powder River Basin and is No. 10 in the Permian Basin.

The Oklahoma City-based company’s board said it had received the proposal from Hamm on behalf of himself and his family.

“The board intends to establish a special committee consisting of independent directors of the Board to consider the proposal,” Continental said. “The board expects that the special committee will retain independent advisers, including independent financial and legal advisers, to assist it in this process.”

Continental’s stock price rose sharply on Tuesday, opening at $74.88/share after closing Monday at $64.50. It remained above $73 as of midday.

Considered a founding father of the Lower 48 onshore unconventional boom, Hamm founded Continental in 1967 at the age of 21 after working in the oilfields as a teenager. The company went public in 2007 as the onshore gas and oil revolution began to take off.

Continental is more easily positioned to go private than most of its publicly traded peers, explained NGI’s Patrick Rau, director of strategy and research. This is because its percentage of shares outstanding, aka its float, is about 17%, versus a median of more than 90% for publicly traded U.S. exploration and production companies. The Hamm family collectively owns the other 83%.

Going private is a way for producers “to rid themselves of the shackles placed on them by Wall Street,” Rau said. “Privates can grow production as much as they would like without fear of reprisals from the investment community. They can drill where they want, when they want, as much as they want.”

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The Hamm family’s proposal of $70.00/share represents a roughly 11% premium to the volume weighted average share price during the last 30 trading days through June 13. It’s a 21% premium to the average share price to date this year, the company noted. 

Continental cautioned shareholders that it had “only recently received the Hamm family’s proposal and has not had an opportunity to carefully review and evaluate the proposal or make any decision” regarding its response.  

Continental last month revised its 2022 spending guidance upward to $2.6-2.7 billion from previous guidance of $2.3 billion.