When it comes to talking with billionaires, only one from Oklahoma can make you feel like you’ve just shot the breeze with the friendly gent who held the door open for you while you were both entering a restaurant.
That down-to-earth Oklahoma demeanor and self-made billionaire status are not the only things that Harold Hamm shares with his hero, the late Sam Walton; he also shares with him the kind of persistence and focus on a bigger picture that turns dreams into realities.
His passion for his profession and ability to not only recognize opportunity, but to take risks and grab hold, has secured his business, Continental Resources Inc., as one of the largest privately owned oil and gas exploration companies in the country.
As founder, chairman and CEO, Hamm has weathered the ebb and flow of the energy industry to turn Continental into a major player known for exploiting reserves that others have given up on or found too expensive to tap.
Currently ranked as Forbes’ 39th wealthiest American – and 136th wealthiest person in the world – Hamm has amassed personal wealth in excess of $5 billion.
He says his forte is that of being a “very good” oil and gas conjurer, but that’s just Midwestern modesty.
Having built a huge reserve of crude oil from scratch, his humble beginnings taught him the value of a good day’s work for a good day’s pay – a simple philosophy that has certainly worked well for him.
Starting From Scratch
The youngest of 13 children, Hamm was raised by his hard-working parents in a one bedroom house, without electricity or running water, in rural Lexington, Okla.
As sharecroppers, his family never owned their land and survived by working for landowners pulling cotton, hauling hay and other laborious jobs.
At home, everyone in the close-knit family had a job to do – from the youngest to the oldest – and they all worked for the family unit.
Hamm remembers gathering eggs and feeding the family’s animals as a little boy, and recalls the hearty work ethic such tasks instilled in him at an early age.
“We took a larger role within the family and contributed in every way that we could to help improve our life. A strong work ethic was engrained in us right off the bat, and we all knew we had our parts and roles to fulfill,” he says.
“When I was growing up, we didn’t have a TV, so dreams would go a long way. I remember one of the first toys I ever played with was a little truck with a Pillsbury baking soda can wired onto it. That was my tank truck.”
After high school, although he aspired to pursue a degree, Hamm couldn’t afford college, so he took a job working for a contractor in the oil field service in Enid.
It was there where his entrepreneurial ambitions were born, and seeds perhaps sprouted from childhood memories of that Pillsbury tank truck began to take on a whole new life.
“I had never been around people in the oil business until I came to Enid, and after observing them, I realized they were a little bit different from everyone else – they were a generous, charismatic and very exciting crowd… an interesting group that I knew that I wanted to be a part of,” he says.
“I had done very well working for a contractor, helping to build his business up, and I felt that I could be successful.”
Encouraged to venture out and start a business of his own, Hamm began to pick the brains of professionals, learning everything he could while developing a passion for oil and gas.
At the age of 20, Hamm took over payments on a water pump truck and established his first company – Harold Hamm Tank Truck Services – hauling mud and hauling water to rigs, which would later become what Continental is today.
“Over the years, I started doing research in oil and gas, and the more I read about it the more it appealed to me. So I changed my dreams to something perhaps bigger, and wanted to eventually pursue that. When I got the opportunity, my attention became focused on becoming an oil and gas explorationist.”
Black Gold And Beyond
Devoting his spare time to researching maps, Hamm eventually came upon potential in a small oil play running across the counties of Alfalfa, Woods and Major in northwest Oklahoma.
After buying up leases in the area, he took a chance and drilled a “wildcat” exploratory well in one that had been started years before but hadn’t yet been hit.
The excitement and uncertainty of taking a risk like that very first play, where almost everything he had was on the line, Hamm says is one of the most enjoyable aspects of his work.
“I remember with that first well, (the landowner) Mr. Bradly would come out and sit with me sometimes on the rig and say, ‘Harold, why do you think there’s oil here? There’s not any oil here,’ which really goes against the grain because usually every farmer thinks he’s sitting on the mother lode. But Mr. Bradly didn’t,” Hamm recalls.
“Sure enough, though, there was oil and the well came in pretty big – starting at 20 barrels an hour and 480 a day. As you can imagine, he was extremely pleased – as was I.”
Thus began a trend of re-drilling for oil, using modern day innovation and information to discover what may have been overlooked before technology was available to enable a hit.
“That first well got us off and started, but what it really did for me was allow me to go to college and pursue an education in the field that I needed, which was petroleum geology, so I could better develop my skills to find oil and gas.”
Contrary to the conventional, it’s safe to say that Hamm did it all backwards: He made his fortune in the oil patch, then invested his money in a college education.
He credits the degree he earned at Phillips University in Enid to helping him grow as a businessman, calling it one of the most important investments he has made.
“You know a lot of things that go on in your life that you just know you should be doing? Well, college was one of those things. Its effects were huge and prepared me for a good career. It let me realize the extent of the dreams I had and has been absolutely essential to everything I’ve done.”
Booms, Busts And Innovation
With a pricing environment as lucrative as the energy industry’s, Hamm has inevitably faced booms and busts that have threatened as much famine as they have offered feasts, particularly in the ‘80s when the bust came and prices fell to less than half of what they had been at their peak.
To stay on top, Hamm says that keeping debt low has been crucial, and always staying in a good business financial position has gone a long way in allowing Continental to rebound when opportunity came along after tough times.
“We’ve survived some prices when oil went to $8 a barrel, and we had to shut down everything. Those were some pretty tough times. This business is not easy, particularly when you start looking for bigger projects and meaningful plays. The more risk that you take with some of these bigger plays, it can get really challenging,” he explains.
As is most often the case when pursuing the aspirations of a bigger picture’s vision, Hamm and Continental’s success has involved continual evolution and maneuvering of bold moves.
During the late 1980s, the company began to shift their reserve and production profiles toward crude oil, believing its valuation potential exceeded that of natural gas.
“I work with a very talented team of experts, and we’ve got a great synergy amongst us, particularly with innovation in finding oil and gas. As one of the foremost developers of crude oil in the U.S., we’re certainly doing that in huge measures today with the source rocks themselves,” says Hamm.
In 1993, Continental expanded into the Rocky Mountain region, first into the Red River Units of Montana and the Dakotas, and then into the Bakken Shale play in Montana and North Dakota.
The company has since become the third largest crude oil producer in the Rocky Mountain region, and of particular significance, the largest leaseholder and driller in the Bakken Shale, America’s “oil bonanza.”
Hamm says one of his biggest milestones has been ongoing since Continental first hit upon Cedar Hills Fields in the Bakken formation in 1995, which was at the time the biggest onshore discovery the U.S. had seen in more than 20 years.
“One of our biggest ‘Aha!’ moments is with the Bakken Formation to produce the shale rocks (source rocks) themselves. That’s a tremendous deal, and when fully developed, may have the potential to produce as much as 24 billion barrels,” Hamm says.
“We’ve certainly learned that the unconventional play that has come about with the source rocks themselves is tremendous. That has been a real eye opener, and I’m proud of the role that Continental has been able to play in that technology.
“The revolution that’s been brought about with the new technology available is huge, and it’s been done basically from operators with vision in this country that had faith and courage to go out and get it done – and these are the independents, not the major oil companies.”
He says that the major oil companies who basically left America to go international over the years are now buying back – attempting to buy out independents and buy into the plays that independents have already secured.
“The large players are finding out that they’ve missed out on big deals back home. Some of them were very, very doubtful as to what could be done, and when they finally woke up they’d missed the boat.
“For the first time since 1997, with the new onshore U.S. production, we lowered the imports in this country to less than 50 percent, and stopped the decline in production in the U.S. in 2005. That goes against everything everybody thinks these days – that production is declining and oil and gas is going to run out soon. Those things are just not correct,” Hamm adds.
Investing in the Future
If there’s one underlying theme to Hamm’s story, one might say it’s the importance of making good investments – be it in business, education, the future of where your passions lie or causes on which you take a stance.
In 2007, Hamm and his wife Sue Ann committed $7 million in support of the Oklahoma Diabetes Center at the University of Oklahoma Health Sciences Center through their charitable foundation.
They later gave an additional $3 million to help acquire the building that is now the Harold Hamm Oklahoma Diabetes Center.
Hamm, himself a type 2 diabetic, says he anticipates the center becoming one of the largest regional centers in the country.
“This is a disease that can get serious real quick after diagnosis if you can’t get the right help. The center has helped a lot of people get that help,” he says.
“Research has done phenomenal things, lots for the future. Over $50 million in grants for research got funding going in big way. I’ve seen so much progress already – the center has touched a lot of lives.”
As for his own life, the energy tycoon – who enjoys quail and pheasant hunting, golf and learning about other cultures through travel – says he tried retirement once as a younger man, but just couldn’t seem to find enough to keep his busy mind occupied.
“I just don’t see myself retiring. I like what I do. I work with a whole lot of good people and I have fun in the field. I think it’s important to be a spokesperson for the business you are in, and I want to continue to help tell the story that needs to be told.”