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Insider Weekends: Harold Hamm Purchases $20 Million Worth of Continental Resources

  • March 13, 2022

A challenging macro environment continued to roil markets last week with the S&P 500 dropping 2.4% and the Nasdaq dropping 3.6%. Inflation remained persistently high, rising 7.9% in February, WTI crude briefly touched $130 per barrel earlier in the week (Brent went even higher touching $140 per barrel) and the war in Ukraine shows no signs of abating. The humanitarian toll this unnecessary war is creating is painful to watch. Millions have lost their homes, evacuation corridors have come under shelling and the economic damage this conflict will cause is likely to be widespread.

Given the hit to supply from sanctions on Russia, domestic crude producers like Continental Resources (CLR) and Diamondback Energy (FANG) are uniquely positioned to benefit from higher WTI crude prices. Other companies in the energy complex including transportation companies (pipelines) like Enbridge (ENB) and Enterprise Product Partners (EPD), service companies like Baker Hughes (BKR) and Halliburton (HAL) and downstream refiners like Marathon Petroleum (MPC) and Valero Energy (VLO) are also going to benefit from higher oil prices.

Harold Hamm’s $20 million insider purchase of Continental Resources (CLR) is not surprising considering the focus for the U.S. is going to be on domestic production and frackers are uniquely positioned to increase supply in a high crude oil price environment. I got interested in fracking companies and specifically Continental Resources after WTI crude briefly dipped into unprecedented negative territory in April 2020 and we saw a large number of insider purchases across energy companies including Continental Resources. We wrote about Continental Resources in our August 2020 Special Situations Newsletter and it is the best performing stock in the Inside Arbitrage Model Portfolio, up 237% since we added it to the portfolio.

We wrote the following about CLR in that newsletter,

Headquartered in Oklahoma City, Continental Resources was founded by Harold Hamm in 1967. It is one of the largest oil and natural gas producers in the Bakken fields of North Dakota and Montana. Most of the company’s operations are concentrated in North Dakota and Oklahoma. The company produces 58% of its oil and gas from its Northern region, which encompasses North Dakota and Montana. This region is also responsible for 69% of its oil and gas revenue. The rest of its production comes from its Oaklahoma operations. The company uses advanced technology, to place a drill bit in oil reservoirs about the size of a basketball hoop two miles away, after drilling two miles down. Horizontal drilling provides access to resource plays that were previously not economic to produce.

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