Continental Resources' billionaire founder Harold Hamm is trying take the US shale producer private with an offer to buy the 17pc of company stock his family does not already own.
The non-binding cash proposal of $70/share represents a premium of 9pc over Continental's closing share price on 13 June. The Hamm family collectively holds about 83pc of outstanding shares, Continental said. The offer to take the company private is worth about $4.3bn, according to RBC Capital Markets.
Continental, which was founded by Hamm in 1967, went public in 2007. In a note to employees, Hamm said the dwindling number of public exploration and production companies in recent years reflects a lack of support for the sector, particularly since the pandemic.
"We have determined that the opportunity today is with private companies who have the freedom to operate and aren't limited by public markets, similar to the way that we operated approximately 15 years ago, prior to becoming a public entity," Hamm wrote.
Public explorers have, for the most part, exercised restraint as oil prices rallied this year on tight supplies exacerbated by Russia's invasion of Ukraine, heeding shareholder calls for improved returns rather than unrestrained drilling. That has been a constant source of frustration for the White House, which has repeatedly called on domestic operators to step up output to help rein in sky-high fuel costs and inflation. Private drillers have faced fewer restrictions.
Continental's board will set up a special committee of independent directors to consider the proposal.
"The proposal constitutes only an indication of interest by the Hamm family and does not constitute a binding commitment with respect to the proposed transaction or any other transaction," the company said.
A higher price may be required to win over shareholders "especially in the current elevated commodity price environment," RBC analyst Scott Hanold said in a note to clients.
Continental, the largest leaseholder and producer in North Dakota's Bakken shale basin, is also active in the Anadarko basin, the Powder River basin in Wyoming, and the Permian in Texas and New Mexico.
In April, Continental raised its forecasts for 2022 production and capital spending on the back of surging oil prices. It also increased its quarterly dividend by 22pc.
