The Left is engaged in total war against American energy. Armed with lies and faulty science, they are wholly committed to the destruction of our nations reliable energy resources, putting our national security, prosperity, and way of life at risk. Funded by billions of dollars from so-called green energy, leftist politicians have told Americans for years that their world is on the brink of destruction. And yet... we're all still here.
Harold Hamm, founder and executive chairman of Continental Resources, joins this week’s episode of “The Kevin Roberts Show” to discuss the daunting but possible task of securing America’s energy future. Hamm is also the author of a new book, “Game Changer: Our Fifty-Year Mission to Secure America's Energy Independence.”
It's possible for America to be energy independent. But the lies have to stop, and Harold Hamm plans to set the record straight.
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Kevin Roberts: Welcome back to The Kevin Roberts Show. While we normally record episodes in the studio, this week we’ll be featuring my conversation in front of a live audience with author and expert Harold Hamm. We’ll discuss safeguarding American energy, how the EPA is interfering with consumers and the free market, and more. And let me just say, if you’re unfamiliar with Harold Hamm, who is a good friend of mine and of Heritage’s, you are in for a treat. He’s a national treasure. As always, don’t forget to like and to subscribe. It helps us reach even more freedom loving patriots like you. We have a country to save. Stay tuned.
This is a special conversation about the American Dream and it is an American Dream that not only has been fulfilled and charted by our friend Harold Hamm, who’s written this truly wonderful book Game Changer, something he and I will talk about briefly, but in that, the lessons that every American, no matter where they’re from, what their background is, what language their people spoke, how long their family’s been in the United States can achieve. And Lord knows, given all the challenges in the country, given the interference of government in the daily lives of Americans, this is a resoundingly good story to tell. So, it is a great pleasure for all of us at Heritage to have Mr. Hamm here. From this Southerner speaking about this other Southerner, it is just a pleasure to welcome this rural Oklahoman. Harold went to work in the oil fields as a teenager and then established Continental Resources at the age of 21.
He had built a grassroots startup into a top 10 oil producer and the largest privately held oil company in the United States. As a voice for America’s oil and natural gas industry, he’s helped to make America energy independent. He co-founded and serves as executive chairman of the Domestic Energy Producers Alliance, and he is widely recognized as the person who led the charge to lift America’s 40-year ban on US crude oil exports, vital of course, not just for the men and women in the energy business, but for all of us and for every human on planet Earth. That’s what we’re going to talk about today. I’ll highlight one other aspect of Harold’s life and then I know he will want to cut to the chase and talk about the book, and that is that he is very involved in his community. He has been a leader in promoting health, education, energy industry advocacy.
He’s devoted much time and many resources to championing a healthy and secure future for all Americans, having invested and donated many efforts to find a cure for diabetes. He’s also donated the seed capital to start two schools of engineering, one at the University of Mary in Bismarck, North Dakota, and another at the University of North Dakota itself. I could spend a lot of time talking about all of the awards that Harold has won and he has deserved, but I’ll just leave it with this one, sort of an informal award from the Heritage Foundation, which is that he is a great American, one of the wonderful patriots of this age because he understands initiative and liberty and the importance of strong family and communities, before you even get to that word, government. So, would you please join me in welcoming our friend Harold Hamm. Welcome.
Harold Hamm: Thank you. You bet, good to be here with you.
Roberts: Well, thanks. Against your better judgment, you’re in the imperial city of D.C. for a day, but we’re grateful that you are and you’ve got a lot of friends in the audience. As I mentioned, Harold, we have also a large online audience, our friends at C-SPAN are broadcasting this, and we’re just grateful that an everyday American would show up here to talk about the American Dream. So I grew up, as I told you a little while ago, in a family of roughnecks in Lafayette, Louisiana, the blue collar side of the business, which you know well too. And so I’m reading your book, I finished it last night, and I told my wife and kids at dinner, I said, “This is a book you have to read,” and audience members at Heritage sort of expect me to say that, I really do mean it. It is something that all of you should read, we have copies for you, at least first come, first serve after this conversation. But all of that to say, Harold, what inspired you to write the book at this point in your life?
Hamm: Well, first of all, I felt like it was a story that had to be told, it’s so misunderstood, so much confusion around it. What did give us the energy renaissance in America? We were on a steep decline in production, both oil and gas was going downhill and everybody called it terminal decline. It was going to be produced out, that was it, found everything that could be found, and then all of a sudden big upturn in production in oil and gas. And what did that come from? It came from one thing, and that was horizontal drilling. The ability to drill down two miles, turn right, and go another two miles. Nobody thought that was possible. Nobody in their business thought that was possible, but we did that. And with that much wellbore exposure to 12, 15 feet of the reservoir, suddenly you had two miles. So, you had a million times of productive capacity that you had with that reservoir and 10, 12 feet, and it was a game changer.
All of the oil saturated reservoirs in America that had low [inaudible 00:06:04] and low perm, you could turn on with this technology, and it did. And the first ever horizontal oil field drill in the world, Continental was drilling that, and us and one other company was the only companies that ever drilled a well in it, and we didn’t even use any kind of wellbore stimulation. You just drill the wellbore and that was it, it produced. It wouldn’t produce vertically, but it produced horizontally, and it was just a game changer. Nobody even wanted to participate in this first field. Everybody there was like... They bailed if they had ownership and the properties up there, well, they’d farm it out to you or sell it to you or something. They wouldn’t participate. They thought it was money pit, and I wondered if it was too when we began, but it turned out....
But it was a wonderful story, and over the next 10 years, we tripled American oil and gas production and it’s been a wonderful thing, and so many people have been involved. And this is a story of your family, the roughnecks, the people that is out there, all those blue collar workers that made it happen, that figured it out really from the iron standpoint, from the driller’s knowledge, how to do that, how to turn sideways and get it to go where you wanted it to go, not the other direction and-
Roberts: Which is no small feat.
Hamm: No, not a small feat, without getting hung up in a hole and all those things, stay in zone for two miles out there and make it produce. So anyway, all that had to be told. I knew it had to be told. I hope somebody else would tell it, nobody did. So, finally this became incumbent upon me to do that, and it took a long while, but put it in this book and I feel very humble to be the person that did that, and I’m very glad to have it done, glad to have it out. And I hope a lot of people read it and understand our business, so there’s been a lot of disparages along the way, a lot of people that saw what we were doing and didn’t want to see that, didn’t want to see the US come back with a lot of oil and gas production.
Roberts: No, they wanted to see your industry just completely go away.
Hamm: They wanted to see the demise of it. They wanted to see the demise of us. They looked at us as conservative business people, which we are for the most part, we can’t deny it. We’re conservative business people.
Roberts: We have no problem with that at the Heritage Foundation.
Hamm: I’m not going to apologize for it.
Roberts: Don’t.
Hamm: And anyway, along the way, a lot of people saw to disparage, downright lie about what we were doing, how we were doing it. It’s going to end up polluting all the water in the world. We was going to do all these bad things, none of which has happened.
Roberts: So, I want to ask a question about the business side of things before we talk a little bit about the impact for everyday people around the world based on the game-changing nature of horizontal drilling. And that is the nature of entrepreneurship, you’ve got to take risks in order to reap benefits. And the material benefit of entrepreneurship of taking that risk of course is money, but as you’d explained well in the book, it’s more than about money. We’ll get into that too, but this is the question, it seems as if that when you’re drilling that first well using horizontal drilling, I’m just going to assume up to that point that was the biggest risk you had taken in your life. And how long did it take for you to realize that all that capital you invested, you used a poker metaphor, you put all your chips into the table that you realized, oh, this risk is going to pay off?
Hamm: Well, certainly those first few wells, some of which was disasters. You got hung up in a hole, business zone did get in... So, it just didn’t work. So a lot of those were, and it took a long time to do some of this, it wasn’t easy. And some people did think, “Well, that’s a money pit, we’re going to avoid that,” but it wasn’t fashionable to be doing what we were doing at all, so it took some time to answer your question. It took some time to realize that, “Wow, we’re getting better at it. We’re going to be able to make this work.” We started out drilling 1,000 feet out, pretty soon we was drilling 2,500 feet, pretty soon we could drill a mile, pretty soon we could drill two miles, and all the times those economics were changing and getting better and we were getting better at what we did.
I talk about it in the book, talk about crude implements, tools that we were using. I called them clunky even, the belly assemblies that we were using to kick off and turn 90 degrees and it was clunky. After the invention of mud motors and all these things, it got a lot easier, but that came later. And we had some of the primary service providers that we said, “We need near bit technology where we can stay in zone. We need the research done to give us those tools that we need.” Had one of them tell me after I gave up four or five of them, tell them what we needed, one of them took me aside and said, “Look, Mr. Hamm,” he said, “I’m sorry, but this is such a novel idea you’ve got here, this horizontal drilling.” He said, “We just can’t afford to spend any research dollars on it.”
Roberts: Another risk of business innovation, right?
Hamm: Too much risk. And I said, “Well, I’ll tell you one thing, we’re going to use somebody and whoever we use, they’re going to get all of our business.”
Roberts: It’s a good response, Harold. I think that was effective.
Hamm: So we did, three years later, that same guy had to go buy them to get the technology that they’d advanced. So anyway, it’d been some funny things happen along the way.
Roberts: Some young entrepreneurs in the audience, I happen to know, and no doubt there’s some who are watching online, there’s a lesson there which is to stick to your guns, but also I’ll just take this wonderful story that you’ve told about your business in horizontal drilling and make the obvious application that I’m sure our audience friends have done to any industry, which is that one of the things that it seems as if culturally, socially, maybe also especially in terms of policy we’ve gotten away from in the United States is understanding the importance of innovation from individual companies.
The amount of capital it takes to make that work because of the trial and error, especially in your business, and also that sometimes you’re going to fail and that’s the cost of risk. Oil and gas industry is probably the best at exemplifying that in the United States that is cycle of boom and bust, which certainly growing up in a family of roughnecks I remember well, but I want to shift gears only slightly and move from the perspective of your business and maybe our perspective at Heritage about amplifying the good work of great individual corporations and talk about the impact of horizontal drilling on the quality of life, not just for Americans, but for I would posit billions, billions of people in the world. Is that a fair question?
Hamm: Yes, a fair topic for sure. For instance, when we broke the code in the Bakken, this was a very hard shale and-
Roberts: This is North Dakota.
Hamm: North Dakota, and it was not an easy thing to... This is Montana, North Dakota. That’s really where it began, and anyway, it was almost impossible to break the code and make this produce economically, and it took a lot of trial and error you mentioned earlier, but once we did, this was the finest high quality oil you’ve ever seen in your life and it had a lot of the middle distillates that you need, particularly for kerosene, diesel production.
And in fact, everybody will remember when diesel got so high and it was like 4.50, $5 a gallon, and anyway, that brought on so much of this fuel with the middle distillates that diesel went to 2.25 a gallon, so half and did it fairly quickly. This was around 2010 and wow, that was a huge change because everything up to that point, a lot of the product that was being refined was the heavy Bitumen from Canada. All the refineries that had been outfitted basically to deal with this endless supply of Bitumen heavy oil from Canada, but it didn’t have much middle distillates. So, it produced gasoline, but not the middle distillates that you need for diesel.
Roberts: And so that, along with almost innumerable consequences of the Bakken discovery, the new innovation has really contributed to alleviating what we call energy poverty. Explain that for our audience who may be a little less familiar with that.
Hamm: Well, particularly on the oil side, we’ve been able to basically get away from dependence on the Middle East almost entirely due to what we’re producing, and on the natural gas side, even more so. So, suddenly we became almost a wash with natural gas, and then of course the third part of that is all of the LNGs that’s produced as a result of all the natural gas. So for instance, last winter would’ve got probably real cold once the Ukrainian invasion happened by Russia and Russia cut off the supplies to Europe had it not been for LNG supplies that the US was able to ship. I was told by a good friend of mine that one cargo of LNG would heat a million homes for a month, one.
That one company shipped... I think he said 638 last winter. So you think about that, the difference that it can make around the world, and this is clean burn natural gas. If it does the same thing in those countries that it did here, it could offset a whole lot of pollution. America with clean burning, natural gas, we’ve cleaned up our air, we have the cleanest air in the world today and back to the ‘70s level of pollution as a result, so perhaps we can do that around the world.
Roberts: And yet in spite of the data on that, it’s just an objective truth about the cleanliness of American natural gas, the American oil and gas industry has had a difficult time, unfortunately, penetrating this image of wind turbines and solar panels being as pure as the wind-driven snow. Why is that? Why have both businesses... And I’m talking about the independent producers like you, and even policy groups like Heritage, while we’ve had some limited success in talking about that, why has it been so difficult to penetrate that story?
Hamm: Well, there’s a whole nother element, if you will, to say it like that, that wanted to see that come on because they want that market share of generation.
Roberts: So, you’re saying it’s about money?
Hamm: It’s all about money. You have to follow the dollars and there’s so much dollars going out talking about one solar company in existence today. Their market cap is 10 and a half billion dollars, 95% of that revenue is from subsidies. 95% of that is from subsidies. Now, you think about that. Where’s that come from?
Roberts: It’s a publicly traded company, right? We all own it.
Hamm: Yes, that’s all you.
Roberts: That’s right.
Hamm: That’s where it comes from. So, is it kind of unfair? Then, we’ve had government weigh in on that side as well with all the subsidies, both for solar, wind, all those things, and they’re just going to put them in for a while, get them started, and then that’s going to go away, right? Wrong, they’re still there. Well, they’d be there for a long time probably.
Roberts: That’s the amazing thing about government subsidies and government agencies, it’s hard to get rid of either of them, but we’re going to keep trying, Harold, I can tell you that. One other policy question, if I may, before reading a couple of passages in the book that I think that audience really appreciate and those are more about kind of life principles. And that policy question is, only until recently... I would say only until the last year or so has the relationship between America losing its energy independence on purpose, this is the design of the current regime in the White House, been connected to the Chinese Communist Party benefiting from that. Explain for this audience that connection and why it’s so important from a national security standpoint for America to have energy independence.
Hamm: Well, we had just gotten 2019, September I believe it was, totally energy independent. We were producing more than we’re bringing in, that’s what that means. And so wow, we celebrate that, right? And we’re energy independent, we don’t have to be reliant on anyone. And now suddenly going the other direction with all the push on EVs, you’re totally dependent for all the metals that go into them, cobalt, lithium, all those sorts of things, 85% of which comes from China for those batteries. Right back in the box again for dependence. They locked it up, they own that, so 85% dependence, again, on someone else that you have no control over that probably don’t like you that well, and they got their hands on your neck perhaps going forward.
Roberts: It’s a good way of putting it. Let’s talk a little bit about a couple of passages in the book and then we’ll get into some audience questions. I’m just going to read a short paragraph here, if you don’t mind. It’s a clause or passage about it’s never about the money. You write, “My why is always about so much more than money. More than 50 years ago, I left one of the best paying union jobs with a major oil company to start a one man, one truck oil field service company. I had what I felt like a ton of debt and what felt like a ton of ambition too, yet I was fueled by an inner voice that told me I had a destiny. All I needed to do was trust myself and keep my pedal to the metal. Yes, money is a way to keep score and survive, but it has never been my reason for being. There are better ways to keep score,” you write, “Maintaining purpose in life and abundance of close friends and a wonderful family tops the scorecard.”
It’s hard to add to that, but I’m going to ask you to do that, and especially... For every one in the audience, we all need to hear this, but Heritage benefits by having a plurality of employees who are under 30 or 35. Washington DC Capitol Hill is dominated by young people, we need more of them in office frankly. I know you’re not offended by that, but what advice would you give to people who are saying, man, Harold, the American Dream’s dead?
Hamm: It’s simple, follow your destiny. My destiny... I don’t know why, but you know what it is, I did, and it was fairly simple with me. I could get almost euphoric about what I need to do. I felt it that strong, but you could just get cold chills about, wow, I’m going go do this and I didn’t have anything.
Roberts: But you knew it was possible.
Hamm: I knew it was possible. I could tell somehow. Somehow somebody had a hand on me maybe, but I knew it. I could feel it, and hopefully other people that read that book do the same thing.
Roberts: One of your daughters wrote an afterward to the book, which in addition to the book, to what you wrote, is really poignant and I’m just going to read a paragraph here, which is as a father of daughters I think resonated with me, but also having gotten to know you as an acquaintance over the years, I can see this in you and in a lot of men and women who are of your generation who provide lessons for those of us who are younger to follow, but this is what she writes.
“Dad has always understood his purpose on this earth is greater than himself. He was raised with a strong faith sometimes that guides still today... Something that guides him still today,” not sometimes, “He is ultimately a producer. It’s the most philanthropic thing he can do. He doesn’t take lightly the responsibility he has to provide for his employees, and through the success of his business and his employees, he can have the greatest societal impact. When Dad gives back, he does so with purpose. A little contribution to everything doesn’t have the same impact as does giving back to what you’re passionate about.” That seems like that’s a vital part of how you go about life.
Hamm: It is, the big things, try to find things that are mostly impactful that you really care about, and so we’ve tried to do that. Our foundation basically had three pillars. Energy advocacy, that’s one them.
Roberts: That makes sense.
Hamm: That’s a big one. Education, that’s what helped me break the poverty cycle that our family was in, and so that that’s real important. So, we’ve been involved in that of course, and the other one is health. It means so much to all of us, and some of it is... It’s kind of easy with some of the main disease areas of cancer, heart or whatever, Alzheimer’s even, but the one that I chose was diabetes. In fact, so many people, and yet it was so unpopular, nobody wanted to deal with it. Nobody wanted to put money into it. There wasn’t a procedure attached to it to make doctors a lot of money, so they didn’t want any much to do with it either.
So we said, “Wow, that’s one we need to tackle. We can hopefully do something about it,” and so I’m glad we did. When you look at this past year and by making the public aware of some of the unjust things like the three pharmaceuticals that had kept the patent for 100 years on insulin that was given to them for $1, but they kept that patent by moderating a little bit with the insulin to where they could keep that monopoly up there. Until we brought that to the attention American public, they wasn’t going to give it up, but they finally did. They finally started moderating, got it down to where people could afford it, but poor people was having to ration insulin. Now, you think about it. You need four vials a month if you’re type 1, some of them was trying to get by on one or two of those vials, so part of your body’s dying. That’s not a pretty thing, but that that’s what was going on, and then until Harry Smith and I got on TV and talked about that and made it public, that would’ve probably continued.
Roberts: Well, God bless you for that work, and it’s a lesson too about how much that industry in particular, the big boys in that industry in particular collude with government against the healthy quality of life for Americans, so thank you for your courage there.
Hamm: Hopefully we can find a cure.
Roberts: We’re getting.
Hamm: Research is going on, got a lot of good things happening.
Roberts: And at Oklahoma State University of all places, is that right?
Hamm: Yeah, we’re [inaudible 00:29:29]-
Roberts: I say that as a Longhorn. There’s a little bit of a jab there.
Hamm: Oklahoma University there in Oklahoma City, so Oklahoma.
Roberts: God bless them. So one last question for me, Harold, and then we’ll go to the audience. I really love this paragraph in your book. “Another trait,” you write, “That seems to be innate to successful people is impatience. I’ve heard people in my company joke there’s a clock and then there’s Hamm time. Yes, I like to move quickly. Tomorrow miss is today’s possibilities.” My colleague Diana, when she brought me my copy of the book had this tagged and said, “Kevin, we all here talk about Kevin time at Heritage. You’re going to really love this,” and I think we’ve got to move fast because the country’s on fire, which is why we try to move fast at Heritage, but talk to us about Hamm time, especially for people who are maybe earlier in their careers, trying to figure out their daily discipline at work, and how you get things done.
Hamm: Well, first of all, to get where we need to go, I had a lot of changing to do in myself, so personal improvements, and so that had to happen all quickly. And then the other things, in business, you get a really brilliant idea about a prospect that you really figured out all of a sudden, kind of a breakthrough, and just know that everybody else is having that same idea. If you don’t tie it up, they’re going to. So, I’ve been beat to some really good ideas by a few days, few weeks, few hours. So anyway, we try to instill Hamm time and our executives have. We’ve got a great leadership team at Continental. They’re just terrific in what they do and they make it happen quickly and they understand Hamm time.
Roberts: Thanks for that explanation, so we’ll get into audience questions. We’ll take questions both from those of you who are here in person and also my aforementioned colleague Diana will have some questions coming in from our virtual audience, but we will start with questions here in person. Gentleman, all the way in the back row and just wait for the microphone if you don’t mind.
Richard Stern: Sure. Hi, thank you so much for coming. I’m Richard Stern, the director of the budget center here at Heritage. I’m moved by your dedication, the faith, and the importance you put in it. I wanted to ask you what you thought the integral relationship was between not just faith at the individual level, but throughout a society, creating a society that’s driven to innovation. And I wanted to ask if you think that the left has kind of focused attacks on our faith institutions have been part of why we’ve seen sluggish growth over the last generation and increasing economic frustration.
Roberts: He’s a smart guy.
Hamm: He is. Man, I’ll tell you what, he had about four questions in there, and I think [inaudible 00:32:26].
Roberts: It was pretty slick. It’d take you and me about five minutes to ask that question.
Hamm: Well, first of all, innovation is a great thing that you never know where it’ll come from, but whether it’s the simple things like we did and being out there as working on a rig and from a driller’s standpoint, but absolutely innovation has driven America. You take just what we did. It has driven much of the economy by putting a couple million people to work, so it’s been big. Tax policy, absolutely, we’ve seen all kind of different things occur with tax policy and it can drive it up, it can also drive it down, and too much taxes upon on business, it can get to the point that it drowns them and discourages people, all the entrepreneurs and innovators from taking those chances and risks that provide all the growth and growth possibilities, so good question. You’re exactly right, thank you.
Roberts: Great exchange. Thanks for that response, Harold. Diana, the microphone’s coming your way, ma’am.
Diana: This question is from Lou Pugliaresi of the Energy Policy Research Foundation. Among many in U.S. government, there is a view that hydraulic fracturing was the result of government research and the Department of Energy project funding. What is your perspective on that?
Hamm: Okay, who got that?
Roberts: The question was, there’s some theory that it was government research that created hydraulic fracturing. What’s your response?
Hamm: Well, there’s been a limited amount of government research that people have used. I think George Mitchell talked about how he used some funding under some grants by DOE to improve fracturing technology within Barnett Shale, and he did, I know for a fact that he did, I’m familiar with that. Basically, they were working with vertical wells and I think most of us in the industry had known that you could get gas from shales. In fact, we had perforated some highly shaley sands that really didn’t produce much from the sands, but we got some shale gas as a result, but George through those grants kept working with those shales to produce gas economically from the Barnett from some vertical wells, and I know that happened. The real breakthrough came when Devon bought Mitchell Energy and their properties in North Texas and started working with horizontal drilling in the Barnett, and that really was a key to turn on that development, and it became a big production.
Roberts: A huge growth in production.
Hamm: Huge growth in production and that came from that. So, Larry Nichols and his crew did a great job. I think George may have drilled a few horizontal wells there before Larry bought that, but primarily it was... So anyway, the idea that government brought around this energy renaissance, I heard Obama take full credit for that. You all believe that?
Roberts: President Biden cured cancer last week, anything’s possible.
Hamm: We talked to Obama... I’ll go in just a little quick. We talked to Obama... I wanted him to know just for sure that horizontal drilling very well could give us energy independence in America, and so in a casual gathering by The Giving Pledge people, I made sure that he knew that, and he told me, he said, “Well,” he said, “Secretary Chu had told me that they’re going to invent a battery that’s going to be the key to transportation in the future,” so anyway, that was his response.
Roberts: Don’t [inaudible 00:37:23]-
Hamm: In the next five years.
Roberts: Yeah, right.
Hamm: That was 2012, okay.
Roberts: We could just talk about these claims the left has made about environmental destruction and this battery, which seems like such a fiction, but we’ll move on. We’ll take a question on this side, so the gentleman there. The microphone is coming your way. Keep your... Here you go. Keep your hand raised.
Chris Knight: Hi, Chris Knight with Argus Media. You reportedly told former President Donald Trump that you wouldn’t be supporting him this election cycle, that you’re donating instead to Ron DeSantis and Nikki Haley. What caused you to make that decision and have you had any discussions with DeSantis or Haley about energy policy that you found particularly appealing that made you want to support them?
Hamm: Yes, there’d been several people write about the conversation that I had with Mr. Trump, and my concern is his electability in the general and turn attention to that to make sure that we don’t wind up the same place we did last time. If it’s close, guess who’s going to win? They did last time, might not have been quite fair, but that’s what happened, and I’ll leave that up to everybody’s own opinion. But anyway, that’s what I talked to him about was, what’s he going to do to make sure that he can win the general? If he wins the primary, you have to turn attention to the general election. So, that’s my concern that I discussed with him. They even discussed with his base, he’s got a powerful base, that perhaps he could play the role of kingmaker, help somebody else through the use of his base of support. So, we’ve had several conversations that people have talked about, thank you.
Roberts: Thank you. Gentleman there on that side.
Speaker: Mr. Hamm, again, thank you very much for coming.
Hamm: Thank you.
Speaker: Looking at the early days of the industry and the whole revolution that you were bringing about, what were some of the initial inklings that your thesis was correct and what did you see? And was it a question of seeing what the initial results of what you saw as possible, or was it a question of appreciating the significance? So, it’s a question of taking advantage of something that you see and was it a question of appreciating what you saw or the significance of what you saw?
Hamm: Good question, I thought about that as I look back upon it all these years later. First of all, I was so impressed by what I was seeing in the industry at that time, surrounded by a lot of different people that had never been around, and just my initial research into it, how much it had contributed to the overall growth of Oklahoma, that I was aware of, and what it could do in the future I think was, wow, it just felt like it was fantastic. I wanted to be a part of it. So, I think it was a little bit of both of those things, so good question. Thank you for it.
Roberts: Probably just vital in addition to your own knowledge and gut instincts to have a great team around you, which I know is another principle of yours and successful leaders, but I love that question. Diana, I know you’ve got a virtual question for us.
Diana: It’s difficult to understand the massive preoccupation and commitment to net zero 2050, which yields very high costs and little environmental benefits. Domestic oil and gas production is a primary instrument of wealth creation and national power for the United States. Can you explain the misplaced focus on net zero?
Hamm: Well, I don’t know that anybody can explain.
Roberts: You’re so kind.
Hamm: Harold, net zero emphasis that’s out there. A lot of people just get caught up in it and make statements that we’re going to be net zero in 30, 40 years and try to get there. Some people are serious about it. It’s possible, in some instances, to be net zero or offset completely. It’s like the project that we’re involved in with the carbon capture from ethanol plants and underground sequestration of that carbon, which would more than offset our production. So, you could be net zero and you think, “Wow, here you are, an oil company, you’re helping the agriculture community and why would you do that?” Is the obvious question because it’s the right thing to, it’s the right to do is to dumping all the carbon out as it’s going on today. Why not capture it? Why not sequester underground where it’s safe for thousands of years?
Roberts: Great question. Yes, ma’am in the front. The microphone is going to come down your way momentarily.
Diana: Would you mind saying your name and how hold onto this?
Helen Teplitskaia: Okay. Helen Teplitskaia, the global management partner of Imnex Group. Mr. Roberts, thank you so much for hosting this.
Roberts: My pleasure.
Teplitskaia: This is really amazing, and Mr. Hamm, you mentioned you’re not about money. What was your mission to take the company private? This is one side of the question, and second is, how can those of us who truly believe in your mission, to really carry the truth and help destroy the lies and all the false flare about shale industry and energy independence, help compel those who are currently misled? Because there is so much lies, particularly among the young generation’s university campuses? How can we become a part of your effort for the Domestic Energy Producers Alliance? Because I know you need a lot of help.
Roberts: Good question, thank you.
Hamm: Well, first of all, I’ll talk about the going private. It served our purpose to be a public company when we went public in 2007, and we knew we was onto something huge there in the Bakken, and the only way we could develop that was to have a big influx of capital, and so we could do that by going public, selling part of the company to the public, and so we did that and that’s why we went, and you got paid to be public companies back then. The multiple, for instance, value was eight to nine times the forward EBITDA, forward earnings.
We went private when you no longer got paid for it. After COVID-19, suddenly your valuation was down to three or four times, and people had... And that’s another important reason for writing this book right now, had finally thought that, “Wow, oil and gas companies, no need for them anymore, right?” Wrong, and the valuation got down to three or four, you didn’t get paid to be public and go through the headaches of being a public company. So, we bought back the 16% we didn’t own, and so it was pretty simple, which gave us about 20% more time to run the company, which is huge. So, that was a good thing in that regard. So, the last part of her question of...
Teplitskaia: Oh, I can-
Hamm: Oh, how can you all help?
Roberts: Yes.
Hamm: How can-
Teplitskaia: Stakeholders because I think each of us is a stakeholder on this issue.
Hamm: Absolutely.
Teplitskaia: The narrative is false and it’s dominating in the public domain, so how can we become engaged, for example, in the DEPA, in order to make sure that we can strengthen your voice and actually deliver the message and return the minds to the right place?
Hamm: It is a great question.
Roberts: How can we help? Everyone’s a stakeholder, especially given the aforementioned narrative, which has sort of overrun the truth, the reality of the situation.
Hamm: Good question. Absolutely, that’s a terrific question. Every one of us has a stake in this game. Every one of us can be a player. You need to voice your opinions. Diane’s such a good example here on the front row. You have a great testimony about the industry and what it is, what it means, and the reality of the situation. Every one of us plays such a big part. Jerry, I see him back there with DEPA. We’re out there every day writing articles, doing the news, different things about the reality of energy industry in America and what is right and what’s wrong, and sometimes it’s hard to gather all the detail of the last policy that’s passed by the folks that don’t like you and the impact that it’s going to have on a consuming public that don’t even know about it, that they slide in under the guise of some bill or the other. So, each one of us being on the guard and weighing in every chance you get with your neighbors, talking to the folks in your sphere of influence is so important to be a part of that, so thank you.
Roberts: And I’ll piggyback on that very briefly. Harold’s obviously the expert, but from the standpoint of just messaging on policy, I’m often confronted with the question that Diana, our other colleagues who work on energy policy, from people who say, “In my circle of friends, no one wants to hear this story,” and I think using good rhetoric, which is usually a question... Not a leading question, you want to establish a good rapport with someone who’s skeptical, and there’s a lot of skepticism about the reality on this issue, as you know, but in order to ask the good questions that lead to a good conversation, you have to be based in facts.
And that’s where Diana and our team, and there are obviously other people in the audience and people who aren’t here who do a good job of that, but that’s the key thing is to have those three or four or five facts that probably people who are innocently buying into an ill-intentioned narrative don’t know because our schools are terrible, especially on this issue and other issues. This, by the way, is why we have to end the US Department of Education. I told my colleagues at Heritage, every time we do an event, regardless of the topic, I’m mentioning that until it’s gone. All right, Diana, do you have a virtual question for us? Yes, the microphone is coming your way. Thank you.
Diana: What do we need to do to educate the public about the dangers of China and losing energy dependence to a country that’s not friendly to us, especially after Russia just cut off the oil to Europe?
Hamm: Well, it should be obvious now with this last example, how important our national security is, and energy independence gives us that, and we can’t fritter that away, but China, they have their own deal and their deal is not your deal. This a communist country, and let me tell you, they’re steeped in communism and it’s not democracy at all. Those people are oppressed. It’s not a good situation by any imagination, and any time that we think they’re our friends, look out, it’s going to be too bad.
Roberts: [inaudible 00:51:43] have been duped by that for about 10 years.
Hamm: We’ve been duped and we certainly have. And Xi, he’s meeting with the wrong folks, he’s supporting the wrong folks. He’s an anarchist and he’s not our type of people at all.
Roberts: By the way, anyone interested... Yes, thanks for the response and a great question. Anyone interested in this should go to a paper that almost all of my policy colleagues at the Heritage had a hand in and that’s Winning the New Cold War with China, a substantial part of that is what we do on energy policy. All right, time for a question here. Yes, sir.
Speaker: Could you please comment a bit on the Appalachian pipeline? What was the real fundamental business opposition and the impact of finishing it?
Hamm: Well, it’s all about consumers and that that’s the benefit of all consumers get this pipeline laid, and certainly those people that are on propane or other fuels that need this natural gas. So politically, that’s why we’re shut down. All the lawsuits from Sierra Club, everybody else that shut this down because they didn’t want it complete, but it goes back to a fundamental thing that they figured out... It’s been something in progress a long time about how to close down oil and gas altogether, and if they could do it through pipelines, I don’t care if it’s natural gas or crude oil or whatever, eliminate our ability to get our product to market, well, then they put you out of business.
So, that’s what it really comes down to, and then we had an administration that wouldn’t stand up for the letter of the law and go ahead and push it through because this is a lawful thing that these folks... They made the application, they followed the law, and it was blocked till now. It’s unfortunate. We saw the same thing in North Dakota with the Dakota line and it’s finally passed, but it took a long time and it hurts consumers, it hurts the consuming public, it holds up prices of product.
Roberts: In those interludes, consumers really are hurt. Young lady here had a question. We’ll go there before we take a virtual question from Diana.
Karen Harned: Thank you. Hi, Karen Harned. I’m proudly from Oklahoma and I thank you for what you’ve done for our state. I wanted to ask though, we just talked about the pipeline and the regulators with that, when you were doing your innovative technology, were there regulatory roadblocks you experienced then, or were you ahead of the regulators when you were doing this?
Hamm: Good question, and yeah, there was a lot of roadblocks. The whole world and all the oil fields everywhere in the world, North Dakota or Montana or even Oklahoma, that basically was set up for vertical wells spacing units. And so, you’d have 40 acres spacing for a well or 80 acres spacing for gas or whatever. Suddenly, in order to drill a long lateral horizontals, you needed 1,280 acre spacing for those units. And so we had doubters within our camp said, “You’ll never get that done,” but we did. We had a wonderful North Dakota Industrial Commission and in Montana we had an energy commission there for oil and gas that saw the need for it and changed the spacing. And so, we did it really kind of systematically and got it done okay, and it’s worked beautifully and wonderfully well. And it’s been such a boon to landowners, royalty owners. You see these people that their first check is $1 million, not a bad deal.
So, it worked wonderfully well. One of the toughest states to get a long lateral horizontal bill was actually Oklahoma. So, we had some small operators that came in and had opposition to it, and we worked five years to get that changed, but finally did. And now Oklahoma’s done equally as well with production, so sometimes you just have to have faith, work through the system, and to get it done. Unless you have opposition, like in New York, for instance, when Governor Cuomo decides that there’s not going to be any horizontal drilling in New York. So, we have landowners that join their neighbors, brothers in Pennsylvania, these brothers in Pennsylvania got wealthy, these brothers in New York didn’t get anything, which is unfair, unfortunately. So anyway, very good question. Diana, you get the last question.
Diana: Thank you. Your company pioneered horizontal drilling and hydraulic fracturing making America energy independent. Why haven’t other countries done the same? Is it that they lack the geological formations? Is it that they lack the technology or is it regulatory burdens? Why don’t other countries want to copy the United States in this manner?
Hamm: Good question, and other countries do want to copy it, but America’s great. I’ll just tell you right now, it’s just a great nation. We have land ownership that you own the subsurface if you own the surface, that’s what it was, and so it’s great. A lot of other nations, you don’t have that situation, so government can block you. And so, you have these political or socioeconomic political decisions made that won’t let them develop it. For instance, there’s a Bakken lookalike in the Paris basin. Can you develop that? No, the French government owns the subsurface and some of them don’t want that to happen. And so, there they are and not doing it well. There’s other nations that have similar situations that as a great... In Argentina for instance, there’s what would be a huge horizontal play, and it’s seeing some development. It’s taken forever to get it done because of government intervention, so that’s the primary purpose.
Roberts: And the combination of America’s natural resources, men and women with initiative.
Hamm: It’s like Daniel-
Roberts: Education system, it’s unique.
Hamm: Daniel Wester, one of his quotes was, “Let us go forth and develop a nation’s resources,” that still hangs in the chambers of Congress, and it was a very wise decision. Everything natural comes from the earth, oil and gas does as well.
Roberts: One bit of housekeeping before we wrap up, so when we conclude here in a little bit, Harold has very graciously agreed to sign some books. We’ve got several dozen books out there. First come, first serve. I know that you’ll abide the rule of law and not rush out there like mad men and mad women. It’s America after all, you’re here, and also in addition to the book that’s out there for you, we believe in feeding you, sustaining your energy, so there’s lunch out there. One of the most important parts of our culture at Heritage is just the comradery of taking some time and visiting, especially amid all these challenges we have. So, avail yourself of all of those things, and thank you for being part of this. Those of you who joined online, thanks for joining online, but most of all, I’ll conclude by saying to one of the great patriots of our age, Mr. Harold Hamm, thank you for being here. Shall we? Great job.
Hamm: Yeah, thank you.
The Kevin Roberts Show is brought to you by more than half a million members of The Heritage Foundation. The producer is Philip Reynolds. Sound design by Lauren Evans, Mark Guiney, and Tim Kennedy.
