Oil magnate ordered to pay US$996m in divorce settlement

Houston

CONTINENTAL Resources CEO Harold Hamm has been ordered to pay nearly US$1 billion to his ex-wife in one of the largest-ever US divorce judgments, according to a court filing.

In an 80-page ruling following a more than nine-week divorce trial that ended last month, Oklahoma Special Judge Howard Haralson ruled on Monday that the oil magnate should pay his ex-wife a total of US$995.5 million.

Although the award could make Sue Ann Hamm, 58, one of the 100 wealthiest women in the United States, according to Forbes' rankings, it is far smaller than the amount her lawyers sought and does not require Mr Hamm to sell Continental shares.

He holds 68 per cent of the firm's shares. During the trial, Ms Hamm's lawyers had asked Judge Haralson to split a marital estate they estimated to be worth at least US$17 billion, tied up in Continental shares.

Judge Haralson's ruling is subject to appeal, but if accepted by both parties it would allow Continental's CEO to put a contentious and time-consuming divorce behind him and to remain the controlling shareholder of one of America's most successful oil companies. "As Continental has stated on numerous previous occasions, this private matter has not had, and will not have, any impact or effect on the company's business or operations," Continental said in a statement.

Through her lawyers, Ms Hamm declined comment on Monday. Her legal team said it would be "evaluating Ms Hamm's options". Following news of the judgment, Continental shares fell 1.6 per cent to US$54.22 per share. The shares have lost around 30 per cent since July 1, in step with tumbling world oil prices.

Mr Hamm's Continental stake is now worth around US$13.9 billion, down from more than US$18 billion before the trial began. Oklahoma City-based Continental is a leading driller in the Bakken Shale play of North Dakota and Montana, the largest US oil discovery in decades. Through his stake in Continental, Mr Hamm is believed to own more oil underground than any other American.

The Hamms wed in 1988 and had no prenuptial agreement. For years, Ms Hamm was also an executive at Continental.

Some of the largest-ever US divorce settlements have been kept private, but the Hamm judgment is among the biggest on record. In a 2010 divorce settlement, casino magnate Steve Wynn agreed to transfer 11 million shares in Wynn Resorts, then worth US$741 million, to his ex-wife Elaine, according to filings with the US Securities and Exchange Commission.

To secure the Hamm judgment, Judge Haralson placed a lien on 20 million shares of Continental stock. That decision does not require Mr Hamm to sell shares. The judge ordered Mr Hamm, 68, to pay his ex-wife about one-third of the funds, or US$322.7 million, by the end of 2014, the filing says.

Mr Hamm will be required to pay the rest of the judgment, or US$650 million, in instalments worth at least US$7 million per month, according to the filing. Ms Hamm has already been awarded around US$25 million from the marital estate since the case was filed in 2012, the court said.

Judge Haralson's ruling may come as a relief to some of Continental's other shareholders, who had worried that a multi-billion-dollar award could force Mr Hamm to sell a major chunk of the company quickly, potentially depressing the value of the shares or eroding his control of the firm.

"With this rather small settlement, it just removes some of the uncertainty," said Mike Breard, analyst with Hodges Capital Management in Dallas. "And there's already enough uncertainty around energy stocks right now with the oil price drop."

At stake in the case was how much of Continental's rising value could be attributed to the role played by the CEO. Under Oklahoma law, the enhancement of wealth that comes as a result of the efforts, skills or funds of either spouse is subject to "equitable distribution".

Over the 26-year marriage, the value of Continental soared some 400-fold. During the trial, Mr Hamm's legal team contended that Continental's growing wealth was mostly due to passive or market factors such as the rising price of oil.

Seeking a larger judgment, Ms Hamm's lawyers called expert witnesses to show that Continental grew because of Mr Hamm's deft management decisions. Judge Haralson found that Mr Hamm played a central role in his company, but he did not agree with the massive dollar values that Ms Hamm's expert witnesses placed on the CEO's contributions to Continental's wealth.

For instance, the judge wrote that the experts had not established exactly how much value was attributed solely to Mr Hamm and not to other managers at Continental, and that passive factors like oil prices and new technologies helped to propel the firm's value.

Among the assets that will go to Ms Hamm, according to Judge Haralson's judgment, are the couple's US$17.5 million ranch in Carmel, California, and a home worth US$4.7 million in Oklahoma City. REUTERS