Continental Resources Inc closed up 15% in the stock market on Tuesday after a “take private” proposal from billionaire-founder Harold G. Hamm and his family.
The NYSE-listed company is the largest oil producer in the Anadarko Basin of Oklahoma.
Details of the Hamm Family’s bid
The Hamm Family already owns roughly 83% of Continental Resources and is willing to pay $70 a share in cash for the remaining stake. The offer that values the Oklahoma-headquartered company at $25.41 billion translates to a 9.0% premium on the price at which the stock closed its regular session on Monday.
According to Continental Resources, it will set up a special committee comprising independent directors to evaluate the bid. It also “cautioned” investors that the Company has not yet decided on accepting or rejecting the proposal. There is, therefore, no guarantee yet that an agreement will be signed.
Hamms have no plans of resorting to strategic options even if the offer is rejected.
What else did Continental say in the press release
Continental Resources finds a spot on the list of top 10 independent oil producers in the United States. The press release announcing the Hamm Family’s proposal on Tuesday reads:
“Continental does not undertake any obligation to provide any updates with respect to this or any other transaction, or to provide any additional disclosures to reflect subsequent events, new information or future circumstances, except as required under applicable law.”
The news comes at a time when the ongoing war in Ukraine is keeping oil prices well above $100 a barrel, with many warning it could go much higher to $175 as well. Consequently, the iShares US Oil & Gas Exploration & Production ETF (IEO) is up more than 40% versus the start of the year 2022.
A brief recap of the CLR stock price action
Last month, Continental Resources reported better-than-expected profit for its fiscal first quarter. Its revenue, however, came in shy of what the experts had forecast.
Wall Street, at present, rates the stock at “hold”. On average, it sees upside to $75.37 a share – only a 2.0% increase from where the stock is trading right now.
The $27 billion company that trades at a PE multiple of 13.50 is up about 60% for the year. The current stock price is the highest its shares have achieved in the history of the company.