During his nearly 50 years as an Oklahoma oil
man, Harold Hamm has done everything on a huge scale. The chief
executive and majority shareholder of Continental Resources, he owns the
largest piece of the greatest oil discovery of our age, in the
shale-rich plains of North Dakota. His net worth has been pegged at more
than $18 billion by Forbes, making him the 24th richest man in the
country.
Now
another superlative can be added to Mr. Hamm’s outsize career: He is
paying one of the biggest divorce settlements in history.
After
a secretive, nine-week trial, a judge in Oklahoma City has ruled that
the 68-year-old Mr. Hamm must pay nearly $1 billion to his ex-wife, Sue
Ann Hamm. With the bang of a gavel, Ms. Hamm has joined the ranks of the
wealthiest women in the United States.
Or
rather, she will join those ranks over time. The judgment requires Mr.
Hamm to pay his ex-wife about $320 million, or one-third of the total
settlement, by the end of 2014. The rest is to be paid in chunks of at
least $7 million a month. For a little perspective, that figure is
slightly larger than last year’s salary of the chief executive of U.S.
Steel.
The
settlement looks economy-class compared with the $4.8 billion that the
Russian oligarch and “fertilizer king” Dmitry Rybolovlev paid his
ex-wife, Elena, this year. But the payment is large enough that the
presiding judge in the case, Howard Haralson, placed a lien on 20
million shares — or more than $ 1 billion — of Mr. Hamm’s Continental
stock.
Mr.
Hamm, who has described himself as “more hardheaded than other people,”
did not have a particular document that is all but standard now
whenever tycoons wed: a prenuptial agreement. Barring future fiascos,
this will surely stand as the costliest decision of Mr. Hamm’s life. He
has already paid his ex-wife roughly $25 million since the case was
filed in 2012, the ruling stated.
Messages left with Continental Resources and with a lawyer for Ms. Hamm were not returned.
Harold
Hamm was just another middle-age multimillionaire when he married Sue
Ann Hamm, his second wife and a woman a decade his junior, in 1988. At
the time, Ms. Hamm was a lawyer at Continental and Mr. Hamm was just
beginning to snap up roughly one million acres of land leases in North
Dakota, Montana and parts of Canada in what is the Bakken formation.
The
Bakken turned out to be a rich underground trove. The question at the
center of the divorce trial was what exactly led Mr. Hamm to it and his
epochal fortune — expertise or dumb luck?
Under
Oklahoma law, the answer matters. The money a spouse earns while
married can be part of a divorce settlement if it is made through skill.
If, on the other hand, the increase is attributable to “changing
economic conditions, or circumstances beyond the parties’ control,” as
the state’s Supreme Court put it in a 1995 case, then that money is off
the table.
The
law put Mr. Hamm and his lawyers in an odd spot. They had to argue that
one of the country’s singular entrepreneurs, an up-from-nothing
wildcatter, had essentially stumbled into his billions. This seemed like
a tough sell. Mr. Hamm was once quoted as saying that “My biggest
advantage is that I was born with no advantage.”
As
Mr. Hamm sought to poor-mouth his prowess, his company followed suit.
Continental’s proxy filings with the Securities and Exchange Commission
for years have praised Mr. Hamm for “his leadership and business
judgment.” Not anymore. As Reuters wrote in September, that phrase was
excised in the company’s most recent proxy, along with a reference to
Mr. Hamm as “one of the driving forces” behind Continental.
Judge
Haralson did not seem to buy this just-lucky account of Mr. Hamm’s
accomplishments. In arriving at the settlement terms, the judge cited
Mr. Hamm’s “skills and efforts” and said his leadership spurred an
“increase in value for Continental.” He also called Mr. Hamm “an expert
in the oil field service business” and even after this ruling, Mr. Hamm
remains one of the richest. As a fraction of his net worth, the
settlement leaves him with many billions to spare.
Document: Memorandum Order in Hamm Case
Aside
from the final judgment, little of the proceedings have been public.
All but three days of the trial were held in a room at the Oklahoma City
county courthouse with a handmade “Do Not Enter” sign attached to the
door. Most of the voluminous filings in the case were placed under seal
by the judge, who ruled in early August that “confidential financial
information” about Continental could be revealed in the proceedings that
might harm the company.
But
enough about the case has come to light to make clear that it did not
stint on drama. In a 2013 filing, Ms. Hamm accused her husband of
infidelity, and seven years ago — after she had moved out of their home
and to a different city — she began documenting his extramarital
behavior on audio and video tapes. Lawyers for Mr. Hamm would later
demand those tapes as a way to prove that the two hadn’t lived as
husband and wife for a long time.
Filings
by Mr. Hamm’s lawyers stated that the union had been loveless for more
than a decade, a “marriage in name only.” Ms. Hamm’s lawyers retorted in
a filing of their own that “nothing under Oklahoma law suggests that a
loveless marriage does not qualify as a marriage for the purposes of
property division issues.”
The
settlement is a rare setback for a man accustomed to success on his own
terms. Mr. Hamm is the 13th and youngest child of sharecroppers and he
moved with his parents from job to job as a child. “We went wherever the
cotton was good,” he told National Review last year.
His
interest in the oil business started when he was a teenager, living in
Enid, Okla., with a job at truck stop called the Potter Oil Company. In
1967, he parlayed the proceeds from his truck hauling business into a
tiny oil drilling company, and struck a 75-barrel-an-hour gusher on his
second try.
When
he turned his attention to the Bakken formation, in the mid-’80s, other
companies had already tapped into it and moved on. Mr. Hamm thought
that was a mistake, and fracking and horizontal drilling would prove him
right.
His
hunches and persistence led not just to a vast windfall, but notoriety.
He was named one of Time magazine’s 100 most influential people in the
world in 2012. He and Sue Ann Hamm were photographed at a gala
celebrating the occasion at Jazz at Lincoln Center. Mitt Romney, during
his run for president, named Mr. Hamm his chief energy adviser.
Mr.
Hamm has two adult daughters with Sue Ann Hamm, Jane and Hillary. His
first marriage, to Judith Ann Hamm, ended when she accused him of having
an affair with Sue Ann.
Much
of the judge’s ruling is given over to a lengthy inventory of the
Hamm’s considerable holdings, which include a $17.4 million ranch in
Carmel Valley, Calif., a $4.6 million home in Nichols Hills, Okla., as
well as homes in Enid and Branson, Mo. There is also a hangar at an
airport and shares of an assortment of companies, many of them worth
multiple millions. Then there is Orbit Gas Storage, which was given a
“value of zero” in the ruling.
Mr.
Hamm was granted that apparently worthless entity by the judge, who
painstakingly divvied up everything else. He awarded livestock, farm
equipment and home furnishings from the California ranch to Ms. Hamm,
but gave Mr. Hamm two horses, Star and Uno. The judge even addressed a
last-minute request from Mr. Hamm for “certain family pictures, a few
books, guns, shotguns, some pictures, geode in quartz display, and his
hand tools” in the Nichols Hill residence. Mr. Hamm was awarded all of
it, with one exception.
“Respondent’s request for the geode in quartz display,” the judge wrote, without explanation, “is denied.”
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