Harold Hamm, the billionaire behind Continental Resources and star of the shale oil drilling industry is finding his divorce settlement a little more onerous than he had done. For as the oil price sinks so does the value of his holding in Continental Resources. And as the settlement was struck a little time ago, when a fixed amount was settled that he should pay his ex-wife, that fixed amount is becoming an ever larger portion of that gross net worth of his.
However, we might not want to shed all that many tears for him: when the settlement was announced there was a certain amount of surprise at how low the award actually was. For it didn’t actually include most of the value of his Continental stake. Here’s the latest on this:
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 Since the divorce trial ended Nov. 10, oil hit a five-year low and Continental dropped 30 percent.
As measured by the Bloomberg Billionaires Index, his net worth has been reduced by a third to $10.6 billion. Hamm said Arnall will now get a larger share of their combined wealth than intended by the judge.
What is being said there is true. But also ever so slightly misleading. For the major point of the settlement was that the value of that Continental stake wasn’t in fact included in the estimation of what the payment should be.
A standard starting point for a long running marriage is that assets should be split 50/50. Assuming there’s no prenup and all of that sort of stuff. There are ways in which this can be varied, for example if the specific and particular skill of one of the partners has led to the money being made then allowance can be made for that and a less than equal split made. However, dependent upon the state assets that are owned before marriage may or may not be included in what are considered to be the marital assets to be split. In my native Britain in Scotland they are not and in England they usually are, just as an example.
As it happens the divorce took place in a state where those before marriage assets are not considered to be marital property. And Hamm had founded Continental before his marriage. Thus the value of his stake ($18 billion or so at the time of the settlement) was not a determining factor in the award of $1 billion to his ex-wife.
Given that this is so the fall in the value of his Continental stake to $10 billion or so also should not affect, particularly, the value of the award. As it’s not the value of the Continental stake which was the determining factor in the estimation of what the award should be.
Of course, the whole case strikes me as being two people who both want to have their cake and eat it but that’s all an entirely different matter.