Comprehensive Energy Data Intelligence
Information About Energy Companies, Their Assets, Market Deals, Industry Documents and More...
Continental Resources Becomes Private, Harold Hamm Purchases it for $4.3 Billion
11/07/2022
Continental Resources Inc. agreed to be purchased by its founder, Harold G. Hamm, in a $4.3 billion cash deal that would take the U.S. shale giant private.
On October 17 Continental, based in Oklahoma City, concluded an agreement to be acquired by Omega Acquisition Inc., an entity owned by Hamm, for $74.28 per share. The offer price denotes a 15% premium to the closing price on June 13 — the day before Hamm’s family revealed their initial $70 per share proposal.
Being an industry icon who helped lead the charge to lift America’s 40-year-old ban on U.S. crude oil exports, Hamm had managed to establish Continental Resources in 1967. Since then, the company has evolved into one of the top 10 oil producers in the U.S.
However, Continental became public in 2007, as the public market rewarded companies for both growth and performance, according to Harold G. Hamm.
Throughout a long time, the public market has changed, especially since the COVID pandemic. Hamm is convinced that the market response has not been there for the oil and gas industry, noting the decreasing number of public E&P companies.
David Deckelbaum, managing director, and senior analyst at Cowen agreed with Hamm’s view that Continental is not obliged to be supported by capital markets, given its healthy free cash flow (FCF) yield and a leverage-neutral profile in 2023 and even taking into account plans to partially finance the transaction through a new term loan facility.
Even with the proposed incremental leverage from the buyout, CLR would be almost 0.6x leveraged in 2023, and expected FCF, even before assuming reduced costs from going private (else dividend), would have the term loan repaid in about 1.5 years. As a private company, Continental should have greater freedom to operate, particularly in areas such as exploration.
Being a chairman of Continental Resources, Hamm and his family own 83% of the company’s stock. Based on the shares outstanding as of October 12, the tender offer would be for almost 58 million shares of common stock, according to the Continental release.
The tender offer values Continental at roughly $27 billion. The offer price is slightly under Siebert Williams Shank & Co. LLC’s $75 price target and compares to the consensus price target of $72.86 on FactSet and $71.73 on Bloomberg.
Continental is the largest leaseholder and the largest producer in the nation’s premier oil field, the Bakken play of North Dakota and Montana. Continental is considered to be the largest producer in the Anadarko Basin of Oklahoma. Additionally, the company has newly purchased positions in the Powder River Basin of Wyoming and the Permian Basin of West Texas.
Meanwhile, the merger transaction does not demand a vote by Continental’s shareholders and is anticipated to close before year-end. Following closing, the remaining public operators in the Bakken will include Chord Energy Corp., ConocoPhillips Co., Hess Corp., Devon Energy Corp., Northern Oil and Gas Inc., Marathon Oil Corp., Ovintiv Inc., and Exxon Mobil Corp.
Continental’s board of directors, acting on the unanimous recommendation of a special committee including only independent and disinterested directors, has approved the merger agreement and the transactions contemplated thereby and recommended that Continental’s shareholders tender their shares of common stock under the tender offer.
Intrepid Partners LLC is acting as financial adviser and Vinson & Elkins LLP (V&E) is acting as legal counsel to Hamm. Evercore is a financial adviser and Wachtell, Lipton, Rosen & Katz is providing legal counsel to the special committee of the Continental Resources board of directors. Sidley Austin lawyers Mark Metts and Kayleigh McNelis represented Evercore.
If you are looking for more information about energy companies, their assets, and energy deals, please, contact our sales office mapping@hartenergy.com, Tel. 619-349-4970 or SCHEDULE A DEMO to learn how Rextag can help you leverage energy data for your business.
Ain't Nothing Like a $2 Billion Deal: Oasis Sells Midstream Affiliate to Crestwood
Crestwood & Oasis Midstream merge to create a top Williston #basin player. $1.8 billion deal is expected to close during the Q1 of 2022. The transaction will result in a 21.7% ownership stake for Oasis in Crestwood common units. The remaining ownership of Oasis in Crestwood will also be of benefit to the company since it will create a diversified midstream operator with a strong balance sheet and a bullish outlook after this accretive merger.
Who's Next after Diamondback? Potential Takeover Targets in the Permian Basin
The $26 billion purchase of Endeavor Energy Resources by Diamondback Energy, with its stock up 2.6%, is the newest big deal combining oil and gas production in the Permian Basin under a few big companies
Kinetik Holdings recently announced a series of transactions in the energy sector. They struck a deal to buy Durango Permian infrastructure for $765 million. At the same time, they're selling their 16% share in the Gulf Coast Express Pipeline to ArcLight Capital Partners for $540 million. The total purchase cost includes $510 million in cash paid immediately and an additional $30 million that will be paid later, depending on whether they decide to expand further.
Recently, the Permian has seen significant acquisitions: Exxon Mobil purchased Pioneer Natural Resources for about $60 billion. Diamondback Energy's $26 billion deal to acquire Endeavor Energy Resources is currently on hold due to requests from the U.S. Federal Trade Commission. Occidental’s acquisition of CrownRock for $12 billion in the Midland.
EOG Resources is pushing boundaries in Ohio's Utica oil play and now drilling on the Sable pad, also located in Noble County. This site features the 3.7-mile lateral currently under construction. The company's first multi-well pads in the area Timberwolf and Xavier have each produced over 200,000 barrels of oil since their inception—Timberwolf in August and Xavier in October. A third site, the four-well White Rhino pad in Noble County, is also showing promising early results, according to Keith Trasko, EOG’s Senior Vice President of Exploration and Production, who noted the wells are performing as expected in their initial weeks.