Harold Hamm is an oil executive who has a personal net worth of $20 billion. That net worth makes Harold the richest person in Oklahoma by more than $7 billion. It also makes him the 23rd richest person in The United States, directly behind Microsoft's Steve Ballmer and directly ahead of Nike's Phil Knight. Hamm is a member of the Oklahoma Hall of Fame, one of Time Magazines' 100 Most Influential People in the World for 2012 and was Mitt Romney's official energy advisor during his failed Presidential campaign. Unfortunately Harold might be on track to add a new, significantly less admirable, accolade to his resume. At some point in the coming months, Harold Hamm might take ownership of the record for the most expensive divorce of all time.
Harold Hamm Divorce / Fernando Leon/Getty Images
Harold Hamm was born on December 11, 1945 in Lexington, Oklahoma to a dirt poor family of cotton sharecroppers. He is the youngest of 13 children. After graduating from high school, college was financially out of the question so Harold got a minimum wage job at a gas station in Enid Oklahoma. Hamm saved every penny he earned and at the age of 22 he founded the Shelly Dean Oil Company (named after his two eldest daughters). Harold saw very little success in his first seven years in the oil business. Finally, in 1974 he drilled a claim that would eventually go on to produce 75 barrels per day.
Shelly Dean Oil's lucky streak would continue for the next several decades most notably with large discoveries in North Dakota and Montana. In the 1990s, after the company's name was officially changed to Continental Resources, Harold Hamm had his biggest oil discovery of all time: The Bakken field of North Dakota. The Bakken field would turn out to be largest untapped source of oil in America since the 1960s and today produces more than 700,000 barrels per day. That represents 10% of all daily American oil production. The Bakken field is expected to produce a total of 24 billion barrels of oil which makes it one of the 15 largest oil discoveries in history. By comparison, the largest oil discovery ever, Saudi Arabia's Ghawar Field, produces 5 million barrels a day and is expected to produce as many as 83 billion barrels in its lifetime.
Thanks largely to the Bakken field discovery, Continental has grown into one of largest and most powerful petroleum producers in America. Today, Continental Resources is the fourth largest publicly traded company in Oklahoma with over 500 employees, $2.4 billion in annual revenue and a market cap of $16 billion! Throughout this rapid growth, Harold Hamm managed to maintain a 70% controlling stake of the company, which as of this writing has given him a net worth of $20 billion! Harold is the largest "owner" of oil in the United States.
In April 1988, fresh off divorcing his first wife, and more importantly just a few months before the Bakken discovery, Harold met and married a rising young executive at his own company named Sue Ann. The future Sue Ann Hamm would eventually rise to be one of the top executives at Continental. Sue Ann organized large scale oil-industry trade groups and even testified to Congress on behalf of Continental before she left to raise the couple's two young children Jane and Hilary. Unfortunately the happy marriage began to unravel in 2010 when Sue Ann allegedly caught Harold with another woman. Over the next two years, the couple became more estranged until Sue Ann finally filed for divorce in May 2012. At the time of their marriage, Continental Oil was valued at $50 to $100 million. Today the company has a market cap north of $27 billion.
Under Oklahoma law, all assets and wealth that are acquired during a marriage are split in half in the event of a divorce. Harold could be required to give Sue Ann half of his 126.3 million shares of Continental Resources, roughly 63.15 million shares. At today's closing price, those shares would be worth a whopping $9.125 billion.
But there is a catch! Oklahoma divorce law does have one interesting quirk. In Oklahoma, Sue Ann's lawyers will have to prove that the fortune earned by Harold during their marriage was the result of "active efforts". Did Harold earn this fortune through active mental and physical business efforts? Without his decision making and other business skills would the fortune have NOT accumulated? In other words, could Harold have hired a chimp to run his affairs in 1988 (right after the marriage) and still manage to be worth $20 billion today? Sue Ann's lawyers need to prove that the fortune required "active effort" on Harold's part and that his business efforts were assisted by her efforts as a wife, homemaker and member of the marital partnership. Harold's lawyers will want to prove the chimpanzee theory. More specifically that Harold made a few wise decisions back in the 1980s (before he married Sue Ann) and that his fortune would have accumulated regardless of his involvement over the next 20 years.
If Sue Ann is successful, $9.125 billion would easily set the record for most expensive divorce of all time. The current definitive record for most expensive divorce is the $1.7 billion settlement Rupert Murdoch paid to his first wife Anna in 1999. The reason we say "definitively" in the previous sentence is because earlier this year, Russian fertilizer billionaire Dmitry Rybolovlev was ordered by a Swiss judge to pay his ex-wife Elena $4.5 billion. But so far Dmitry has shown no intention of honoring that ruling since he does not recognize Swiss law over Russian. But even if that judgement was enforced somehow, Harold Hamm's divorce would still be twice as expensive!
And here's where Harold Hamm's case gets really interesting: If Harold is ordered to hand over 63 million shares of Continental to Sue Ann, his overall equity stake would be reduced from 70% to 35%. At that level, he could potentially lose majority control of the company. Losing majority control could open the company up to hostile takeovers, poor management, and could theoretically even result in Harold being fired from his own company, which would have previously been unthinkable.
With all that in mind, it's likely that Harold will find a way to pay Sue Ann a multi-billion dollar cash settlement in order to maintain control. But in order to that, he might theoretically need to come up with $9 billion in cash. That could be hard to do without selling his shares, so he'd need to take out a loan against his equity and pray the oil market doesn't crash in the next few years. Either way it will be very interesting to see how this all unfolds!
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