Special Report: In oil baron's divorce, company lawyer plays star role

Epic divorce of U.S. oil baron may end after ex-wife deposits check Thu, Jan 08 22:46 PM EST image 1 of 3 By Joshua Schneyer NEW YORK (Reuters) - Sue Ann Arnall, the ex-wife of Oklahoma oil magnate Harold Hamm, has deposited a handwritten $975 million divorce check, Hamm's lawyer said on Thursday, in a move that may end an epic divorce battle over a fortune worth billions. Arnall, 58, deposited the check after earlier this week declining the payment and pledging to pursue her appeal of a divorce ruling she viewed as unfair. In the November ruling by an Oklahoma County Court judge, Hamm, the chief executive of Continental Resources was allowed to keep his 68 percent stake in the firm, now worth about $9 billion, while Arnall was awarded about $1 billion in cash and assets from the marital estate. The check represents the entire remaining balance of what Hamm owes Arnall based on the November ruling, including interest. The oilman's divorce lawyer, Craig Box, said he believes Arnall's deposit of the check will end her efforts to appeal the case and that Hamm also wants the case resolved. "We have received confirmation that the check was deposited in an Oklahoma City bank," Box said. "We feel this is the end of the case from her perspective. It means she's done and should dismiss her appeal." A person familiar with Arnall's case confirmed the deposit, which represents one of the largest divorce awards in U.S. history. Arnall could not be reached directly for comment. It was not clear whether she intends to pursue an appeal after the check clears. "If she's cashing the check, I would think the reasonable conclusion is that they both will accept the trial court's decision, dismiss their appeals and put an end to the case," said Oklahoma family law expert Carolyn Thompson. Earlier, Hamm had filed his own appeal, seeking to have Oklahoma's Supreme Court reduce what he owes Arnall, after a plunge in oil prices shaved billions from the value of his Continental shares in recent months. During a trial last year, the shares had been worth as much as $19 billion. The Hamm case, initially filed in 2012, has pitted Oklahoma's most successful oil wildcatter against his former wife of 26 years, an attorney and longtime executive at Continental. The firm, a leading oil driller in North Dakota, was dragged into the case but has said it did not affect business. In an appeal document, Arnall contended a trial judge wrongly allowed Hamm to keep more than 90 percent of the wealth the couple accrued during their marriage. Although Hamm owned Continental before the marriage in 1988, the value of his shares surged 400-fold during the union. Arnall has been seeking a multi-billion dollar portion of those gains. To limit what he would owe, Hamm's defense sought to show that his company's growth during the marriage resulted mostly from "passive" factors beyond his control, such as rising oil prices. Under Oklahoma law, only the growth in wealth stemming from the active efforts and skills of either spouse during the marriage is split in a divorce. Arnall contended that Hamm's deft management of the firm led to its growth. Hamm has already paid Arnall more than $20 million during the case, and the parties have spent millions in legal fees. (Additional writing by Josephine Mason; Editing by Chris Reese, Alan Crosby and Ken Wills) = Special Report: In oil baron's divorce, company lawyer plays star role Wed, Nov 05 14:11 PM EST By Joshua Schneyer and Brian Grow OKLAHOMA CITY (Reuters) - During the divorce trial of oil baron Harold Hamm and wife Sue Ann, an unusual relationship took shape in the Oklahoma courtroom as the marriage was being dismantled. From the bench, Special Judge Howard Haralson playfully tossed red and white peppermints to a lawyer sitting alone in the jury box who didn't represent either of the Hamms in the case. The man, Eric Eissenstat, serves as general counsel, senior vice president, secretary and chief risk officer for Continental Resources, the publicly traded oil company founded and run by Harold. And during a trial that could result in one of the largest divorce judgments in U.S. history, Eissenstat emerged as one of the most important people in the courtroom. For all but a few hours of testimony in the nine-week trial, the proceedings were closed to the public and to the media – a practice atypical in divorce cases that don't involve child custody disputes. But interviews with a half-dozen people who were present in the courtroom, and with others familiar with the case, indicate that Eissenstat played an extraordinary role throughout the trial: 'GENERAL CHITCHAT' On several occasions, Eissenstat, 56, passed through the judge's chambers or into a court staff room and engaged the judge and his staff in conversations, said Haralson's bailiff (1. A court attendant entrusted with duties such as the maintenance of order in a courtroom during a trial. 2. An official who assists a British sheriff and who has the power to execute writs, processes, and arrests.), Jessica Rodriguez. The conversations were “general chitchat,” Rodriguez said. “We're all pretty friendly around here.” In a statement, Continental said Eissenstat “did not speak privately with Judge Haralson in his chambers, and his relationship with Judge Haralson is professional and no different than the other individuals present in his courtroom.” To at least one witness, Eissenstat, a tall, slim career litigator, was an imposing presence. “Eric positioned himself in a very tactical way in the room, in the jury box, basically right on the witness's shoulder,” said a former associate of Harold's who testified in the case. “When the judge looks at the witness, he's also looking at Eric. It just seems intimidating.” Reuters interviewed more than a dozen legal experts including family law attorneys, law professors, retired judges and marital dissolution consultants. All said that Eissenstat's level of involvement in his boss' divorce trial seemed uncommonly deep. Some said that the role Eissenstat – and by extension, Continental – played at the trial raises questions about whether the company supported the personal agenda of Harold Hamm, the company's top shareholder, to the detriment of other shareholders. On Thursday, the day after Continental releases its quarterly earnings, analysts will have a chance to ask about the divorce case during a conference call the company is hosting. “It sounds like the corporation is part of the divorce case,” said Arnold Rutkin, a lawyer at Rutkin Oldham in Connecticut. Rutkin represented the wife of Gary Wendt, a former chief executive at the General Electric Capital unit of GE, in one of the biggest U.S. divorces of the 1990s. “There are only two parties in a divorce: husband and wife.” In that case, Rutkin said he did not recall GE Capital's attorneys playing anything close to the role that Eissenstat is playing in the Hamm divorce. A key difference in the cases is that although Wendt was a top executive, he wasn't a major owner of GE. Hamm owns about two-thirds of Continental. Haralson did not respond to questions from Reuters. His bailiff said the judge would not speak publicly about the case before ruling. MAJOR ROLE Continental, in its statement, said it "did not seek to participate in the divorce case." It was compelled to by Sue Ann, it said. In a court filing last month, Continental said the extent of its involvement in the case may be unprecedented. It contends it has been required to turn over more documents and data than any company “has ever been forced to produce in divorce proceedings in Oklahoma and possibly the nation.” Hamm started Continental in 1967, and about 68 percent of the firm's shares are in his name. His stake was worth more than $18 billion when the trial started in August. It's worth around $14 billion today. Since the couple wed in 1988, Continental has grown from a smalltime driller worth less than $50 million into a $20 billion behemoth (Something enormous in size or power.) and one of Oklahoma's largest companies. Because Harold owned his shares before he and Sue Ann were married, they belong to him. But under Oklahoma law, their “active” appreciation since 1988 is subject to “equitable distribution” with Sue Ann, a former executive at Continental who filed for divorce from Harold in 2012. Her legal team contends that the amount of marital wealth the court should divide is more than $17 billion, a sum that included most of Harold's stake in Continental a few months before the trial began. Court filings show that his attorneys argued that the couple's shared wealth is a tiny fraction of that amount. The couple never signed a prenuptial agreement. (a contract made between a man and woman before they marry, agreeing on the distribution of their assets in the event of divorce) Harold Hamm's leadership at Continental is central to the case. In court, his lawyers attributed most of Continental's success not to Hamm's business savvy but to factors beyond his control. If Haralson accepts the argument – that market factors such as rising oil prices, or decisions made prior to marriage caused Continental's growth – the award to Sue Ann could be much smaller. The trial ended on Oct. 9, and Haralson is poring over thousands of pages of evidence before he issues a judgment in the coming weeks, or the two sides settle. Last week, Haralson denied a motion by Reuters to intervene in the case to have trial transcripts and other records unsealed. The Oklahoma Supreme Court, which heard the Reuters request to unseal the records this week, has not yet ruled. In a filing before those hearings, Continental said it opposed opening court records because the documents contain confidential business information, including strategic plans, board minutes, and highly sensitive information on its oil reserves, among other things. “A corporate counsel would have a legitimate role in trying to keep confidential information about the company from being disseminated,” said Ilan Hirschfeld, head of the marital dissolution practice at the consultancy firm Marcum LLP in New Jersey. Continental may also have a significant interest in the outcome of the trial. If Sue Ann, 58, wins a multi-billion dollar award, a judgment that size could prompt Harold to sell Continental shares, a move that could lead to a change in control of the company. In one court filing, Continental dismissed that possibility as "unfounded speculation." Eissenstat, appointed as Continental's general counsel in 2010, previously had represented Continental and Harold Hamm personally during 27 years in private practice. As recently as 2010, he served as Harold's personal lawyer in a case involving Oklahoma oil and gas wells. Continental was not a party in that case. As of Feb. 22, Eissenstat also owned shares in Continental valued at more than $7 million, SEC filings show. Months before the Hamm divorce trial, Continental expanded Eissenstat's role at the firm, naming him its chief risk officer. The new responsibilities put Eissenstat in charge of keeping Continental out of corporate governance trouble and guarding against conflicts of interest and reputational damage – duties that would give Eissenstat reason to be concerned about the divorce trial. In court filings, Continental said it was brought into the case by Sue Ann Hamm's broad and “abusive” demands for evidence from the company, and because dozens of its current or former employees were subpoenaed ( A writ requiring appearance in court to give testimony. tr.v. sub·poe·naed, sub·poe·na·ing, sub·poe·nas To serve or summon with such a writ). “Continental doesn't like being here,” Eissenstat said at a pre-trial hearing, according to a transcript. Eissenstat told the judge he was only present in court to protect the firm's interests, not Harold's. Allegations by Sue Ann's team that Continental meddled in the case to help Harold have been a sore point between the spouses. In one court filing, his divorce attorneys wrote that the divorce is a matter of “common interest for Mr. Eissenstat,” citing his duty to “all shareholders to oversee any litigation impacting the company.” They added: “Harold Hamm and his counsel are frankly insulted by Petitioner's veiled suggestion of some collusion between them and (Continental) against her interests.” Although Continental says it hasn't taken sides in the divorce, the company has taken unusual steps that could help Harold's case. In September, Reuters reported that the company revised its corporate history in ways that diminish the part Hamm played in its success. In downplaying the CEO's role, the firm recently deleted, added or revised at least 18 items on its website or in corporate filings, Reuters found. (http://reut.rs/1uYWqpH) In addition, Continental has weighed in against Sue Ann. In one of the company's many filings in the case, a “friend-of-the-court” brief in February, Continental urged the judge to deny Sue Ann additional time to prepare for the trial. “To say the least, it's highly unusual for a company to file a friend-of-the court brief in its CEO's closed-door divorce proceeding to oppose his wife's request for more trial preparation time,” said appellate attorney Lawrence Ebner, a Washington-based partner at law firm McKenna Long & Aldridge. Court records show that Haralson denied Sue Ann Hamm's request for another five months of trial preparation. Being hurried to trial could hurt her case, her lawyers contended in court filings, because they were racing to examine about 700,000 pages of uncategorized Continental documents that Eissenstat had delivered to them in response to evidence requests. 'ENORMOUS EXPENSE' A spokeswoman for Continental, Kristin Miskovsky, has repeatedly said the divorce has had no effect on the company. “Mr. Hamm's divorce proceeding is a private matter and has not and is not anticipated to impact Continental Resources' business or operations,” the company said. In one court filing, however, the company says its role in the case has come at “enormous expense.” Eissenstat and his in-house team handled discovery requests in the case. They have filed more than 40 briefs, objections or motions in the divorce case. “Mr. Hamm has an interest in winning, and Continental should not have an interest in Hamm winning per se,” said Paula Dalley, a professor of corporate law at Oklahoma City University Law School. “That's where a conflict of interest could arise. The outcome for Hamm personally shouldn't matter to the corporation.” Former Continental employees who were deposed or called as witnesses told Reuters that the oil company paid for lawyers to represent them. The employees requested anonymity after signing agreements not to discuss their depositions or testimony. It is not unusual for company lawyers to represent employees who will testify in legal cases about their work. But Judith Maute, a law professor at the University of Oklahoma, said that if Eissenstat and Continental used company resources to help Harold, it could draw the ire of other shareholders. A general counsel's duty is to his corporation, not to the CEO's personal interests, she said. “If the general counsel is spending lots of time or company money to save the assets of the person, then he may be in breach of fiduciary duties to shareholders.” Eissenstat's role and Continental's costly involvement in the marital dispute have not been disclosed in detail to the firm's shareholders. How much the company's board knows about Continental's participation in the Hamms' divorce isn't clear. Continental declined to address the question of whether it plans to bill Harold Hamm for the costs it's incurring related to the divorce case. What is apparent is the trust the company has put in its top lawyer. Asked about Continental's involvement in the case, David Boren, the powerful Oklahoma politician who sits on Continental's board and testified in the divorce trial, had little to say. “I have a policy not to make separate statements as a board member,” Boren said. “If you have any questions, please contact Eric Eissenstat.” (Reporting By Joshua Schneyer in Oklahoma City and Brian Grow in Atlanta. Editing by Blake Morrison and Michael Williams) =========================================== Continental Divide U.S. oil baron rewrites his company’s history; move could stave off record divorce payout By Joshua Schneyer and Brian Grow Filed Sept. 24, 2014, 11 a.m. GMT LEGAL STRATEGY: Continental Resources CEO Harold Hamm holds 68 percent of the company’s publicly traded shares – worth about $17 billion. Legal experts say changes on the corporate website may help convince the judge that the surge in Continental’s share value has little to do with Harold’s deft management(Quick and skillful; adroit) during his 26-year marriage to Sue Ann. REUTERS/Steve Sisney CEO Harold Hamm faces paying billions to his estranged wife. Do revisions to his corporation’s website strengthen his hand? OKLAHOMA CITY – The divorce trial of one of America’s wealthiest men, oil baron Harold Hamm, plays out mostly in secret here at the Oklahoma County Courthouse. For weeks, signs have been taped to the door of Courtroom 121. “CLOSED HEARING,” one reads. The other: “DO NOT ENTER.” But an examination of the website of the company Hamm founded, Continental Resources Inc, reveals part of the billionaire’s legal strategy as he seeks to avoid what could be the largest divorce award in U.S. history. Publicly traded Continental has been revising its corporate annals – in each case diminishing the company’s accomplishments under Hamm’s leadership or changing the dates of key achievements. Downplaying his role in Continental’s success is central to Hamm’s chances of minimizing the financial blow from his divorce, lawyers say. According to state law, if Hamm can show that market conditions – rather than his management prowess – led to Continental’s financial success, he won’t have to share those gains with his estranged wife, Sue Ann. The two never signed a prenuptial agreement. Reporters compared Continental’s current corporate website – www.contres.com – with a version from early this year. The analysis was done using the Internet Archive Wayback Machine, a repository of past web pages. Related items Exclusive: Looming divorce could threaten oil baron’s empire Special Report: Lack of a prenup imperils oil billionaire’s fortune Billion dollar debate in Oklahoma divorce – was oilman just lucky? Exclusive: Wife defines stakes in Oklahoma divorce: $17 billion Continental Resources president quits, leaves leadership gap The comparison identified 18 separate items that had been recently deleted, added or revised. The changes included: • Altering a claim that the company was first to “discover” an important oil field near the massive formation known as the Bakken Shale. • Striking all references to Continental being “first” to successfully use or develop new technology that helped it find or pump more oil. • Backdating the company’s hugely profitable decision to shift its exploration focus from natural gas to oil – to before Hamm’s 1988 marriage to Sue Ann. If that decision came prior to the Hamm marriage, then Sue Ann may not be entitled to reap part of the reward. • Adding a date for when Continental moved into its most profitable drilling area. The company’s website now says that the firm moved into the Williston Basin, which straddles North Dakota and Montana, a year before the Hamms were married. The company also deleted an item that said Continental expanded into the Rocky Mountain region in 1993. The company also removed a notable passage from one of its U.S. Securities and Exchange Commission filings, key documents used by investors to evaluate firms. In 2013 and earlier years, the annual proxy statement described Harold Hamm as “one of the driving forces” behind Continental’s success, a man who had “successfully grown the Company through his leadership skills and business judgment.” That passage was dropped in the 2014 proxy. A spokeswoman for Continental Resources, Kristin Miskovsky, declined to comment about any of the specific website changes or the role of Continental’s board in reviewing them. She didn’t answer questions about the proxy change. In an email, Miskovsky repeated a prior statement: The Hamm divorce “has not and is not anticipated to impact Continental Resources’ business or operations.” Since Hamm vs. Hamm began eight weeks ago, journalists have largely been barred from the courtroom. At the request of Continental, nearly all records and exhibits in the trial have been placed under seal by Oklahoma County Judge Howard Haralson; all but three days of the trial have been completely closed to the public. In most states, including Oklahoma, divorce trials usually take place in open court unless a judge closes the proceedings to protect a child. The Hamms have no minor children. Before and After: Explore the changes made to Continental’s website CEO INSIGHTS: Continental has deleted a link on its website to "CEO Insights," the thoughts of CEO Hamm, shown at top; an external site - www.haroldhammonline.com - now says, "the authors have deleted this site." REUTERS GRAPHIC The reason: to shield Continental. Haralson ruled on the trial’s opening day, Aug. 4, that he did not want to “destroy” the company by allowing the public or media to hear discussion of Continental’s “confidential” business activities. “We’ve got an entire trial being conducted in secret,” said Joey Senat, a communications law specialist and associate professor at Oklahoma State University’s School of Media and Strategic Communication. “Mr. Hamm is saying his divorce is a strictly personal matter, but apparently it’s not, because Continental says it will harm the company if the doors are opened. Meanwhile, on the website, Continental appears to be changing significant facts about itself.” There are also personal reasons why Hamm may prefer to keep the proceedings private. In a filing dated March 7, 2013, Sue Ann Hamm alleged that Harold was “having an affair” that she discovered in 2010. In court testimony last month, Harold admitted to spending $150,000 on an “extra-marital pursuit.” HIGH STAKES At stake in the divorce is the $17 billion piece of Continental owned by Harold Hamm through his 68 percent holding in the company’s publicly traded shares. Legal experts interviewed for this article said the changes on the website appear to be part of Hamm’s strategy. “Very simply, the company may be framing Mr. Hamm’s impact as less important than it had before.” Ilan Hirschfeld, head of the marital dissolution practice, Marcum LLP The purpose, they say, is to persuade the judge that the surge in Continental’s share value has little to do with Harold’s deft management during his 26-year marriage to Sue Ann. Under Oklahoma law, if the growth of Continental was “passive” – that is, owing to market factors beyond Harold’s control rather than to his skill and effort – he won’t have to share those gains. “The corporate website, along with public filings, are places we always look when a divorce case involves a business,” said Ilan Hirschfeld, head of the marital dissolution practice at accounting and advisory firm Marcum LLP. “Lawyers love to use the company’s own reports to prove their case that the growth in marital wealth has been active.” “Very simply,” Hirschfeld said, “the company may be framing Mr. Hamm’s impact as less important than it had before.” Hirschfeld isn’t involved in the case. Attorneys representing the Hamms are under court order not to discuss protected information in the case. They declined to comment. Harold Hamm’s lawyers were given a big clue that Continental’s past accomplishments would be used by his wife’s team to demonstrate the central role the founder played in the company’s skyrocketing growth. That’s because parts of the unrevised version of the website – including its corporate “timeline”– were among the exhibits entered into evidence by Sue Ann Hamm’s lawyers before the trial began. Lists of exhibits are shared with both parties in a case. HAMM VS. HAMM: Continental Resources founder and CEO Harold Hamm (left) is believed to own more oil underground than any other American. His estranged wife, Sue Ann (right), is a former lawyer with the company. REUTERS/Steve Sisney “I’ve not tried to mislead anybody” Harold Hamm, Continental Resources founder and CEO One corporate governance specialist said the website revisions raise questions about Continental’s board of directors, chaired by Hamm: Did the board previously allow the company to overstate its achievements? And is it now allowing Hamm to reshape Continental’s image to serve his personal legal goals – and marshalling company resources to do so? When questioned by an attorney for Sue Ann during open testimony on Aug. 6, for example, Harold said he had ordered his staff to revise Continental’s corporate timeline after he realized it contained inaccuracies. “It puts the board in a very awkward position,” said the governance specialist, David Larcker, professor of accounting at Stanford University’s Graduate School of Business. “The question would be, ‘Would they have made those changes absent the personal situation of the CEO?’” A member of Continental’s board, Edward T. Schafer, declined to discuss the changes, or whether the board knew about them. “Given the legal aspects of what you are talking about, I think I ought to leave that question to the company,” said Schafer, former governor of North Dakota. Another board member, former Oklahoma Gov. David Boren, referred questions to Continental’s general counsel. Today, at 68 years old, Hamm is believed to own more oil underground than any other American. Continental’s assets include around 1 million acres of prime land leases in North Dakota and Montana, the location of the largest U.S. oil discovery in decades. Attorneys following the Hamm divorce say a judgment could award 58-year-old Sue Ann Hamm, a former lawyer for Continental, around $3 billion. CLOSED HEARING: Since Hamm vs. Hamm began eight weeks ago, journalists have largely been barred from the courtroom in the Oklahoma County Courthouse. REUTERS/Steve Sisney REVISING HISTORY Reuters could not determine exactly when Continental altered its website. The changes came sometime after March 29, 2014, the most recent day on which the Wayback Machine archived the site, and before Sept. 2, 2014, when Reuters began comparing the archive and the current site. Also unclear: Which version of Continental’s corporate history – revised or original – is more accurate. In media interviews, in the company’s annual report and in other SEC filings, Continental has for years touted its pioneering role in developing the Bakken Shale formation. And it has highlighted the prescient moves of its founder, Harold Hamm, as central to its success. Continental’s website does contain a disclaimer about its contents. Information is provided “as is, solely for convenience, and without warranty of any kind.” It may contain errors, and investors should not base decisions on it, the website cautions. Guidelines published by the SEC say that corporate websites, though considered “informal disclosure,” should adhere to some of the same standards that apply to formal SEC filings. “The broad principles are that the disclosures have to be truthful and fair and cannot be selective,” said Jim Hamilton, principal analyst for federal securities regulation at Wolters Kluwer Law & Business in New York. The Reuters analysis of archived Continental web pages shows a wide range of changes around the time that the CEO’s divorce trial began. A timeline entry describing a 1995 milestone, for example, previously gave Continental sole credit for a momentous event: “Continental discovers” the Cedar Hills oil field – the first major gusher in North Dakota’s recent fracking boom, which led to the development of the now-legendary Bakken Shale, the web page previously read. The old entry added that Continental “is the 1st to develop Cedar Hills exclusively through precision horizontal drilling,” an oil-industry technological innovation. Today, the timeline says Continental “co-discovers” the Cedar Hills field, and no longer takes credit for developing it first. Rather, the company now describes Cedar Hills passively, as “the 1st oil field in the U.S. to be developed exclusively through precision horizontal drilling.” (In his Aug. 6 testimony, Harold Hamm said he recalled that a competitor, Burlington Resources, had tapped into Cedar Hills several months before Continental did.) Other changes backpedal on Continental’s claims that it was ahead of industry competitors in implementing breakthrough oil extraction technologies, a potentially crucial differentiator in the oil industry. A 2007 entry used to say that Continental “is the 1st to complete a 1,280 long-lateral multi-stage frac in North Dakota.” The line referred to an important milestone in using hydraulic fracturing, or fracking, and horizontal drilling to extract oil from the Bakken. That claim no longer appears on the current website. Two other entries, both for 2008, said Continental was the “first” to use specific fracking or horizontal drilling techniques in two separate oil fields. Those entries have been struck from the site. On the witness stand last month, Harold Hamm said several claims on the company’s website timeline were wrong. He pinned part of the blame on Brian Engel, the former vice president of public affairs at Continental, who left in 2011. Contacted for comment, Engel said he wasn’t aware of Hamm’s testimony. “I left Continental on good terms at the end of 2011 and have moved on,” Engel said. He declined to say whether Hamm reviewed the original items before they were posted. Sue Ann Hamm’s attorney, Jon Hester, questioned Harold about items on the company website. Hamm testified that he only recently discovered that some were inaccurate. Continental produces a significant amount of public information, he explained, and Hamm said he doesn’t personally review all of it. “I’ve not tried to mislead anybody,” Hamm testified. COMPANY’S INTERESTS Continental is not named as a party in the Hamm divorce. The company nonetheless sought to keep the trial closed to the public. Continental’s general counsel, Eric Eissenstat, has been a fixture in the courtroom and has arranged depositions and met with witnesses who are testifying at the trial, according to court records and proceedings viewed by Reuters. STOCK SPLIT? A billboard in downtown Oklahoma City touts the value of publicly traded shares in Continental. REUTERS/Steve Sisney “It puts the board in a very awkward position. The question would be, ‘Would they have made those changes absent the personal situation of the CEO?’” David Larcker, corporate governance specialist, Stanford University’s Graduate School of Business Continental still boasts in its SEC filings that it holds the largest acreage position of any oil company in the Bakken, a shale area that Hamm believes contains some 24 billion barrels of oil. Investors may not care about Continental’s revisions to its corporate history, so long as it continues to produce profits, stock analysts say. The driller is ahead of schedule on its five-year plan to double oil production. “I’m not sure it’s huge,” said Joseph Allman, oil and gas analyst at JPMorgan, which also provides investment banking services to Continental. The company should make sure it gets its public statements right, he said, but he added: “People don’t invest in Continental because it discovered the Bakken. They invest in Continental because of future cash flow generation.” Fidelity – the largest outside holder of Continental shares, with a 6.2 percent holding as of June 30 – declined to comment on the oil company’s history changes. Six other institutional holders of Continental shares didn’t respond or declined to comment. Wall Street has been kept largely in the dark about the divorce. Continental has not disclosed the case in the legal proceedings section of its SEC filings. The company first publicly acknowledged the divorce in response to questions from Reuters in March 2013. Judge Haralson already has ruled that Harold’s shares in Continental are an asset that he owned prior to the marriage. As a result, only the increase in the value of those shares during the marriage is at issue in the trial. The ruling leaves around $17 billion in accrued share value at stake. At trial, Continental’s value in 1988, when the Hamms were married, was estimated at less than $50 million. The company’s market capitalization is now near $25 billion. Haralson’s ruling may also pertain to key decisions that Harold or his company made before the 1988 marriage – decisions that subsequently made the company, and Hamm, billions. One of those big decisions occurred when Continental shifted its exploration focus from natural gas to oil, a move that bucked a prevailing U.S. energy industry trend and proved incredibly lucrative. In a news release dated January 24, 1992, Continental said that the shift to oil began in 1988, the year of the marriage. But in court testimony, Harold Hamm said that the news release was wrong and had been issued without his review. Backing Hamm’s courtroom denial, Continental has updated its timeline. In a new website entry, Continental now says the company “changes focus to oil” in 1985 – three years before Harold and Sue Ann Hamm married. Reporting by Joshua Schneyer in Oklahoma City and Brian Grow in Atlanta. Edited by Blake Morrison Photo editing by Jim Bourg and Stelios Varias ===========