This story appears in the May 5, 2014 issue of Forbes.
Harold Hamm has transformed the U.S. oil industry like no one since John D. Rockefeller, while helping to keep domestic prices low — and making himself a $17 billion fortune. The great domestic energy boom, he says, is just beginning.
Two Scotches in, with seats on the floor of Oklahoma City’s Chesapeake Energy CHK +0.96% Arena, Harold Hamm is feeling good. And why not? His hometown Thunder is spending the evening whupping the Philadelphia 76ers. Earlier Hamm announced big bonuses for Continental Resources CLR +1.99% employees, courtesy of record oil production. And a judge’s ruling, revealed that morning, in Hamm’s divorce case suggested the energy tycoon would keep the Continental shares he already owned when he married soon-to-be-ex Sue Ann Hamm 26 years ago. With that chunk of stock, encompassing about $16 billion out of his $16.9 billion fortune, Hamm owns 70% of Continental.
As every wildcatter knows, such is life in the oil patch when you’re on a hot streak. And Hamm’s on perhaps the most epic one in domestic energy history, perhaps save for John D. Rockefeller’s. No one, aside from kings, dictators and post-Soviet kleptocrats, personally owns more black gold–Continental has proved reserves of 1 billion barrels, mostly locked underneath North Dakota. Hamm took the company public in 2007–and shares are up 600% since, as the revolution in horizontal drilling has given America a cheap energy booster shot, fueling factories, keeping a lid on gas prices and adding millions of jobs.
And lest you think anyone with a lease and drilling rig can strike it rich in the middle of the country, crane your neck alongside 68-year-old Hamm’s. “Is he over there?” he asks, peering down the baseline of the basketball court. Yes, Aubrey McClendon, the former CEO of Chesapeake Energy and a part owner of the Thunder, sits in his usual seat.
So at halftime Hamm saunters under the hoop to say hi. McClendon seems surprised–the two aren’t friends. But McClendon, whom FORBES dubbed “America’s Most Reckless Billionaire” on its cover in 2011, shakes his hand and beams a camera-ready smile. When Hamm begins small-talking McClendon’s wife, McClendon himself leans over to a FORBES reporter in a fit of pique. “I don’t get it,” he whispers. “You write all this bad stuff about me, while you hold up Harold Hamm as some paragon of virtue.”
Paragon of virtue? Maybe, maybe not. But what’s clear is that Hamm made money the old-fashioned way: He stuck with what he knew–and innovated. McClendon bet $13 billion in borrowed money that he could buy millions of acres of trendy shale gas fields and flip them at top dollar, but he nearly bankrupted Chesapeake (and soon thereafter lost his job) when prices collapsed from the oversupply he helped create. Hamm plodded along with a buy-and-hold plan for less glamorous oil. Convinced that the newly combined recipe of horizontal drilling and hydraulic fracturing had the potential to unlock not just gas but also oil from deep source rock, Hamm instructed Continental to lease hundreds of thousands of acres while most of the rest of the industry just scratched their heads.
Today North Dakota’s Bakken field produces nine times more oil than it did five years ago, and Continental is good for more than 10% of what comes out–some 100,000 barrels a day. Sure, there remain legitimate concerns about the environmental impact of fracking. But you wouldn’t want to see what the American economy would look like without it.
Harold Hamm’s story is actually the story of postwar domestic energy. Hamm, in fact, was born just a few months after V-J Day, the 13th and last child of Okie sharecroppers who moved to the boom-and-bust oil town of Enid, a place where everyone had seemingly stepped out of the James Dean movie Giant. “The people there were different, charismatic, bigger than life,” remembers Hamm.
He was especially inspired by, of all things, a local potter. At a school assembly, John Frank of Frankoma Pottery in nearby Sapulpa brought his wheel onstage. “He had this lump of clay that he was slapping like a baby,” says Hamm. “It was clear that he did well because that was his passion, his art, and the message was that all of us could do well if we followed our passion in life.” Given his upbringing, Hamm’s was oil.
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