Forecasts from Harold Hamm - July 31

[dan_s]

I miss CLR and Harold Hamm.

The first thing that greets visitors
entering the headquarters of billionaire Harold Hamm’s
Continental Resources Inc. is a 9-foot-long statue of a snarling
bull named Boe.
Boe — short for barrels of oil equivalent — is an apt
symbol for a veteran wildcatter who’s still betting big on more
crude production in the US. Hamm is a shale pioneer, the first
to figure out how to drill miles-long wells sideways to unleash
oil from North Dakota’s Bakken shale region. At the time, it was
the biggest US oil find since Alaska’s Prudhoe Bay in 1968.
Today, Continental, which he and his family control, is the
biggest oil producer in North Dakota and Oklahoma. Continental
is also drilling wells in Wyoming and in the prolific Permian
Basin of West Texas and New Mexico.

“The future is bright,” Hamm, 77, said during an interview
with Bloomberg News this month in his Oklahoma City office. “I
look at it as an industry that is exciting, a lot of adventure,
has a lot of potential for making great wealth.”
His optimism belies forecasts for the US shale sector,
which is showing signs of reaching middle age. Experts predict
output will peak by the end of this decade. The Bakken has
already lost its luster, with output trailing pre-Covid levels.
Even in the Permian, the world’s busiest shale basin, production
is expected to max out by 2030 and gradually trail off from
there.

The current shale slowdown, combined with production cuts
from the OPEC+ alliance, is expected to tip the world’s oil
market into a deficit by the end of the year. And while that’s
likely to support prices and please producers, it suggests the
dynamism and growth in the US industry as espoused by Hamm could
become a thing of the past.

Hamm quibbles with the estimates, saying the Permian may
not reach its high-water mark until 2035 and will see another
25% pop in production first.
“We’ve certainly seen some great days in shale,” he said.
“But have we got a long way to go? Yeah.”

He spoke before the release of his new book, “Game
Changer,” which goes on sale Tuesday. In it, Hamm pushes for a
change in energy policy in Washington that would help boost oil
and gas production. Hamm, the youngest of 13 children born to
Oklahoma sharecroppers, also hopes the book will rally
enthusiasm for the industry that made him wealthy. He’s the
world’s 77th richest person, according to the Bloomberg
Billionaires Index.

“Part of the purpose of this book is to encourage the next
barefooted country boy to imagine that he could do something
equally as good,” he said.

Though Continental is a major US oil producer, Hamm still
proudly calls himself a wildcatter — something of a rarity in an
industry that’s largely become averse to risk. Continental is
one of the few companies drilling in southern Oklahoma, a region
not known for crude-rich shale deposits. Oil prices near $80 a
barrel mean that for Hamm, it’s a bet worth taking.
“It’s a lot of fun,” Hamm said. “There is a thrill to it.
Like finding ancient wealth.”

After runaway production triggered an oil-price crash about
a decade ago, shale drillers have been under pressure to limit
spending and return cash to shareholders. Hamm’s solution: Take
Continental private. That process was completed late last year.
Still, Hamm says he’s proud of US producers’ newfound
discipline. He’s even learned to appreciate OPEC — once a thorn
in shale’s side — for helping to balance the global oil market.
“You have a concentrated amount of production, particularly
with the Saudis, and for them to act like a throttle, that’s
pretty good,” Hamm said. “It prevents waste and oversupply and
also saves some supply for increased demand without decimating
the market.”

Read more: Don’t Expect US Shale Drilling to Recover This
Year, Citi Says

Continental’s production growth this year will be about 5%,
Hamm said, in line with large publicly traded drillers. He
expects similar growth next year.

As far as acquisitions go, Hamm is primarily looking at
deals to expand in basins where Continental is already
operating. But a trip with Hamm down to the basement of his 19-
story office building suggests he’s not ruling out going farther
afield. < Kolibri (KGEIF) might be on Harold's radar screen

All over the basement lobby walls are newly installed
murals depicting the four US shale basins where Continental
operates. Ask if that means he won’t be entering any more
basins, Hamm looks at a nearby hallway with a blank, white wall
and smiles. As far as he’s concerned, the heyday of searching
for oil in unexplored fields is far from over.

“Forty years ago, prior to shale coming about, and
horizontal drilling, finding the next hidden producing field was
tremendous,” he said. “But does it still go on? Absolutely.”

--With assistance from Robert Tuttle.

To contact the reporter on this story:
David Wethe in Houston at dwethe@bloomberg.net
To contact the editors responsible for this story:
Joe Ryan at jryan173@bloomberg.net
Christine Buurma

[ChuckGeb]

Hamm could buy Kolibri out of his petty cash fund.

[dan_s]

Harold is very bullish on the SCOOP oil play in Central OK, which is why I think his team is watching the results of Kolibri closely. I cannot stress enough how valuable it is that Kolibri's leasehold is all HBP.

[mrbill]

Is it big enough size for Harold Hamm? Could he grow it?

[ChuckGeb]

After listening to Wolf Regener on several recent appearances it is pretty clear that their Scoop acreage is not for sale until they have established a better valuation thru their development. Besides Harold Hamm likes to buy things cheap. His acquisition of Pioneer’s Delaware acreage at about 2.5 times cash flow was a steal. Then he redeemed my shares at a ridiculously small premium. He is shrewd. He would make a great Energy Secretary when sanity is restored in DC.

[Cliff_N]

Thanks, ordered the book! https://a.co/d/9UxZs8R

"351 pages, warning on Kindle, due to the size, this could take some time download."

Cliff

[dan_s]

If I was still part of the M&A Team at Hess, I would be pounding on the table that Hess needed to make a run at Kolibri. Finding companies with that much running room in an oil field that is all held-by-production would get a lot of attention if it was in an area of operations. These days Hess has nothing in Oklahoma, so it is not on their radar screen.
Devon and Coterra might be interested.

Kolibri will not accept a low-ball offer because it is generating lots of operating cash flow and has NO DEBT PROBLEMS.