Harold Hamm is an improbable billionaire, the 13th child of sharecroppers who grew up to control more oil than anyone who isn’t a king or a dictator. So from the moment the news broke last year that he and his wife of 25 years were divorcing, the expectation on Wall Street was that Hamm would accept a fight for his cash and his company. Just not a fight like this.
In Hamm v. Hamm, which is in its second week at trial inside a closed Oklahoma City courtroom, one of the world’s largest personal fortunes is caught up in a timeless conundrum of cause and effect. Did Mr. Hamm become one of the planet’s 50 richest people because he was essentially lucky, a Jed Clampett whose shot happened to strike black gold? Or did he climb the human ziggurat primarily because of sweat and skill, a Ragged Dick whose labor set him free?
In legal terms, the case comes down to “active” versus “passive” appreciation of marital assets, explained Carolyn Thompson, a prominent divorce lawyer in Oklahoma City. “To the extent that it was his work that made him wealthy, then it’s a marital asset, subject to equitable division. If it is attributable to what we call ‘passive’ factors—outside his control—then it remains Harold’s property.”
In February Judge Howard Haralson set this question in motion. He ruled that Mr. Hamm’s stake in Continental Resources was personal property. After all, Mr. Hamm had founded the company back in 1967, two decades before he married a brown-eyed lawyer named Sue Ann.
But Continental’s value has quintupled in recent years, producing more than $17 billion in value, according to an economic analysis by his wife's legal team. On Monday Judge Haralson released that document, and within the next few weeks he plans to apportion the $17 billion based on what he believes created it: the work of Mr. Hamm, the grace and beneficence of Mother Earth, or, most likely, some combination.
The result is a downright Shakespearean drama, according to a lawyer familiar with the case. In one corner, the richest energy mogul in America—a drawling, cantankerous, fire-eyed game hunter and amateur pilot—is claiming that all $17 billion was essentially dumb luck. In the other, his wife—who moved out years ago—is claiming that all $17 billion is the result of her husband’s infinite wisdom.
“This happens all the time,” said Raoul Felder, a divorce lawyer who handles high net worth cases in New York City. Most of the country operates under so-called equitable distribution laws, which takes into account active and passive appreciation. The result is a similar sideshow, where one side alleges luck and the other side sings for skill.
The only difference here is the size of the stakes, according to Felder, who called it “the King Kong of divorce cases.” It’s a battle that’s likely to end as the most expensive divorce in the history of marriage. To surpass the $4.5 billion dollar judgement reportedly made in May against Russian “fertilizer king” Dmitry Rybolovlev, Ms. Hamm would only need to get about a quarter of Mr. Hamm’s net worth.
With just $3 billion dollars, Ms. Hamm, 58, would vault past Oprah, and into the top 20 wealthiest women in America. And many legal analysts expect her to do just that when the case concludes sometime this fall. The Hamms never signed a pre-nuptial agreement, and after three children and almost three decades together, Mr. Hamm’s claim that his life is pure luck just doesn’t pass the laugh test, according to other divorce lawyers.
“It’s just hard to believe that a man who built a company had nothing to do with that company’s success,” said Felder. “That assumes Harold is sitting back and sipping a mint julep for all those years.”
Ron Barber, who represents Ms. Hamm, declined to comment on the case. Craig Box, who represents Mr. Hamm, did not respond to a request for comment. In March, Harold Hamm sought to reassure shareholders, telling Forbes, "there is not going to be a disturbance in the management of the company going forward."
But Wall Street is still handicapping the possibility of a massive loss for Mr. Hamm. The same day his divorce went public last year the Continental share price fell 3 percent after months of rising.
“He must be squirming inside.”
And it’s easy to understand why. Hamm is as much a pioneer as any nonfictional person can ever be. He fell in love with oil as a gas-pumping teenager, borrowed money to become a wildcatter in his 20s, and spend the next four decades finding treasure where others failed or never tried.
He was the first to profitably “frack” North Dakota oil wells, leading to a revolution in the way America coaxes energy from the earth. And his company remains the largest leaseholder in the Bakken oil field, which now produces more oil than Alaska’s Prudhoe Bay. In recent years, Continental’s share price has spiked 1000 percent, according to Reuters. By contrast, an index of other oil drilling companies rose about 70 percent.
What must it feel like for Mr. Hamm to now attribute most of his wealth to outside factors? “Oooooooo,” said Ray Williams, an executive coach who blogs regularly for Psychology Today. “There would be a thing called cognitive dissonance going on.”
The more highly skilled and accomplished a person is, the less likely they are to credit chance, and the greater emphasis—whether publicly or not—they place on their own talents, he added. That’s according to a 2008 University of Nebraska study, one of many that suggest successful people don’t really believe in luck.
“He must be squirming inside,” said Dr. Kenneth Settel, the author of CEO Psychology, an e-book published by Harvard Medical School. “He must be very, very uncomfortable.”
To prove this was all more than a lucky stab with a long metal spike, Ms. Hamm has contributed to a case file of more than a million pages of documents. But in an exclusive interview with NBC News last fall, Mr. Hamm himself crowed about “the great renaissance of oil” he helped create.
It was a cloudy day in Central Oklahoma, a short drive from the shack Hamm slept in as a boy and the Merle Haggard song he lived picking cotton with his twelve siblings. He stepped away from a crowd of handlers and a caravan of white Chevy Tahoes. There, as one of his newest oil rigs whined and mewled over his shoulder, he spoke with correspondent Harry Smith.
They surveyed the distance between where Hamm started and where he was now, richer than rich.
“You believe in yourself?” Smith asked.
“I do,” Hamm said.
First published August 24 2014, 1:49 AM