Fracking pioneer Harold Hamm has lost $7 billion since
the oil market imploded. But where others see disaster, he sees a vast
economic opportunity—for himself, and for America.
For someone who has lost nearly half his fortune in six months, Harold Hamm
is pretty chipper when we meet up for dinner on a warm January night in
Houston. He’s calm, relaxed, fit. He’s been walking a lot, tracking his
steps with a pedometer, eating right, and enjoying his hometown
Oklahoma City Thunder.
He’s even got a lady friend who he likes to spend
time with, which is sort of surprising, considering he recently wrote
his ex-wife Sue Ann a $975 million check
to satisfy a court ruling in their highly public, seemingly endless
divorce trial. “I’m just glad that’s in my rearview mirror,” he says
with half a smile.
As much as that divorce cost, Hamm has lost a lot more to the plunge
in oil prices. When Saudi Arabia elected to keep their taps wide open
last November rather than ease back on production amid a global glut, it
helped drive oil prices down 50% in less than six months. That has
triggered some 50,000 oil patch layoffs, the mothballing of more than
400 drilling rigs, and seemingly more pain to come as traders are running out of storage tanks to squirrel away their crude.
Yet, as we sit down to enjoy a spread of oysters, fish and a good bottle of wine at Houston’s Triniti Restaurant, it doesn’t seem so bad. The downturn in oil prices, he insists, is painful, but temporary. He still has his 70% stake in Continental (untouched in the divorce), a $2 billion personal war chest,
and a million-plus acres of prime drilling land. And rather than fear
the future, he sees the selloff as a way of putting himself and other
American drillers back at the center of the global oil market—and maybe
even to keep them there for good. ”Once you get by about a year here
it’s going to open back up again,” Hamm says. “Worldwide demand is going
to catch up with supply. And this thing solves itself. We could be
sitting here a year from now talking about an undersupply. It’s very
short term. Just doesn’t feel that way.”
Above all else, Hamm is in a good mood because, despite his losses,
he sees an opportunity. And not just any opportunity. He thinks the
United States can in time become the most important oil-producing
country on planet earth, usurping the throne from Saudi Arabia. He sees
America’s oil drillers emerging from this difficult downturn as more of a
collective, with new powers and new influence. He’s even given the
group a name.
“I call it Cowboyistan because that’s the attitude of those who have made it happen,” says Hamm, whose Continental Resources CLR -4.88% now produces 200,000 barrels of oil (and natural gas equivalents) per day. What differentiates Cowboyistan, he says, is the Three R’s:
Rigs, Rednecks and property Rights. “We’ve got more rigs running than
in the rest of the world combined. We’ve got highly trained and reliable
rednecks to run them. And unlike anywhere else on the planet, we’ve got
property rights, which enable landowners to lease out their acreage and
receive royalties for their trouble. That’s what sets us apart.”
And as fast as those rednecks with rigs have managed to grow
America’s oil supply, says Hamm, they should be able to stop it fast
enough to stabilize supplies, and prices. “What’s amazing is how
cohesive we’ve been in this downturn. The industry can stop in response
to price signals.”
It hasn’t yet. Despite the cuts, America’s oil production is estimated at 9.3 million barrels per day, up 1.2 million bpd over last year, and still growing.
http://www.forbes.com/sites/christopherhelman/2015/03/09/welcome-to-cowboyistan-fracking-king-harold-hamms-plan-for-u-s-domination-of-global-oil/?ss=energy
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