Organization and Nature of Business

9 Months Ended

Sep. 30, 2022

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Organization and Nature of Business

Organization and Nature of Business

Nature of Business

Continental Resources, Inc. (the “Company”) was formed in 1967 and is incorporated under the laws of the State of Oklahoma. The Company’s principal business is the exploration, development, management, and production of crude oil and natural gas and associated products with properties primarily located in four leading basins in the United States – the Bakken field of North Dakota and Montana, the Anadarko Basin of Oklahoma, the Permian Basin of Texas, and the Powder River Basin of Wyoming. Additionally, the Company pursues the acquisition and management of perpetually owned minerals located in certain of its key operating areas. For the nine months ended September 30, 2022, crude oil accounted for 50% of the Company’s total production and 68% of its crude oil, natural gas, and natural gas liquids revenues.    

Recent Developments

On October 16, 2022, the Company entered into an Agreement and Plan of Merger (the “Merger Agreement”) with Omega Acquisition, Inc. (“Merger Sub”), an entity owned by the Company’s founder, Harold G. Hamm. Mr. Hamm currently serves as Chairman of the Board of Directors of the Company and he, along with certain of his family members and their affiliated entities (collectively, the “Hamm Family”), own approximately 83% of the outstanding shares of the Company’s common stock.

Pursuant to the Merger Agreement, on October 24, 2022, Merger Sub commenced a tender offer (the “Offer”) to purchase any and all of the outstanding shares of the Company’s common stock, other than: (i) shares of common stock owned by the Hamm Family and (ii) shares of common stock underlying unvested equity awards issued pursuant to the Company’s long-term incentive plans (collectively, the “Rollover Shares”) for $74.28 per share in cash (the “Offer Price”). The Offer is scheduled to expire one minute after 11:59 p.m., New York City time, on November 21, 2022. There are approximately 58 million shares of Continental's common stock that are subject to the Offer and approximately 5.3 million shares underlying unvested equity awards that are not held by the Hamm Family. The Offer Price includes $0.28 per share in lieu of the Company's anticipated dividend for the third quarter of 2022. Accordingly, and consistent with the Merger Agreement, the Company will not pay dividends between the signing and closing of the transaction.

The Offer is subject to certain conditions. If the conditions of the Merger Agreement are met, promptly following the consummation of the Offer, Merger Sub will merge with and into the Company (the “Merger”), with the Company continuing as the surviving corporation wholly-owned by the Hamm Family.

At the effective time of the Merger: (a) each share of Company common stock (other than the Rollover Shares and certain other excluded shares specified in the Merger Agreement) that is outstanding immediately prior to the effective time will be canceled and converted into the right to receive the Offer Price in cash; (b) each share held by a member of the Hamm Family will be converted into a newly issued share of the Company having identical rights to the previously existing share held by such holder; and (c) each unvested restricted stock award issued under the Company’s long-term incentive plans that is outstanding immediately prior to the effective time will be canceled and replaced with a restricted stock unit award issued by the Company that provides the holder of such canceled award with the right to receive, on the date that such restricted stock award otherwise would have been settled, and at the Company’s sole discretion, either a share of the Company, a cash award designed to provide substantially equivalent value, or any combination of the two, in each case, together with any unpaid dividends accrued on such restricted stock award.

Subject to the satisfaction of customary closing conditions, the above-described transaction is expected to close prior to December 31, 2022. Upon consummation of the transaction, the Company’s common stock will cease to be listed on the New York Stock Exchange and will subsequently be deregistered under the Securities Exchange Act of 1934, as amended.