Shale pioneer Hamm's $1 billion alimony bill looks bigger as oil sinks
Oklahoma oil billionaire Harold Hamm's victory against his ex-wife in an alimony fight is looking more like a defeat as his net worth plunges.
While his ex-wife, Sue Ann Arnall, appeals her almost-$1 billion award as being too small, Hamm, 69, argues it's now too much. He said his wealth has shrunk with the falling price of oil and the drop in shares of the company he founded, Continental Resources Inc. (CLR) Since the divorce trial ended Nov. 10, oil hit a five-year low and Continental dropped 30 percent.
Hamm said Arnall will now get a larger share of their combined wealth than intended by the judge.
By his math, Arnall is getting a deal of historic proportions. Worse still, Hamm's lawyers say, she wants the court to make him fork over a lump sum payment due Wednesday under the divorce decree, while she continues to fight for more money.
Arnall "has apparently not kept up with the facts regarding the falling price of oil and its impact" on Hamm's Continental shares, his lawyers said in a Dec. 22 state court filing in Oklahoma City in his appeal of the divorce decree. "Never before in Oklahoma history has a litigant claimed to need almost $300 million just to get by while an appeal is pending." Hamm claims the value of his stake in Continental, the company credited with pioneering shale drilling in the Bakken oil basin of North Dakota and Montana, has dropped to "just over $9.4 billion." Arnall claims the oilman is still worth about $18 billion, taking all his holdings into account.
"Where the other half of the alleged $18 billion estate" might be lurking is "a mystery," Hamm said in the filing. He said he "is going to have to borrow money in order to pay this judgment to petitioner; there is no reason she cannot borrow money to finance her appeal" of a judgment in her favor.
Divorce attorneys called the November alimony ruling a victory for Hamm, expressing surprise that a billionaire's spouse didn't get as much as 30 percent of the couple's assets when the marriage was dissolved.
The judge gave Arnall cash in lieu of most property and based her share primarily on Continental's stock price, which he pegged at $116.12 a share to account for a two-to-one stock split that occurred during the divorce trial. Hamm got to keep all the couple's Continental shares, as the judge ruled that he founded the company before the couple married in 1988. Continental closed yesterday at $38.09, as the benchmark for U.S. crude oil fell as low as $52.70 a barrel, from more than $107 in June. and the cheapest since May 2009.
Two weeks ago, Hamm submitted to the court a chart that tracked the simultaneous decline in West Texas's benchmark crude price and Continental shares, asking the judge to take official notice of the free fall.
"The dramatic drop in oil price post-trial and the corresponding drop in the Continental Resources stock price demonstrate the overriding impact of the oil price on the value of the stock," according to the filing.
Arnall's lawyers counter that falling oil and stock prices are irrelevant to the final division of the couple's assets. They contend Hamm's bid to recalculate the alimony should be disregarded, as most of the drop occurred after the trial ended.
"Temporary, post- trial market conditions are not relevant," Ron Barber, one of Arnall's lawyers, said Wednesday in an e-mail. "Commodity prices was only one of many factors involved. Looking at selected factors over a very limited timeframe is meaningless."
Hamm, under the original divorce decree, was to make an initial payment of about $322 million to Arnall by the end of December, with the balance due in $7 million monthly installments until the entire $972 million alimony award is paid. Arnall offered to take just $266 million in initial funds instead, to cover "substantial" maintenance and upkeep expenses that she said have "deluged" her since the divorce.