Public E&Ps Weigh Pros, Cons of Privatization

Following Harold Hamm’s all-cash offer to take his E&P company Continental Resources private, Bracewell’s Austin Lee talked with Energy Intelligence about the potential benefits of taking publicly held companies private.

Being a private company “in many ways allows you the ability to take advantage of strategic options that public companies can’t pursue, as long as you have the capital to do it,” said Lee.

Taking a publicly held company private is no easy feat, though. Hamm’s bid was a special case, given his already large position in a company he founded. Other organizations attempting to go private could end up trading one set of problems for another.

Buying out all of the other shareholders can be a long and potentially costly process, should any shareholders dispute the effort. A privately held company can also become dependent on a few key investors, who would then have a less liquid offramp should they want to cash out.

Lee doesn’t expect Hamm’s bid to kickstart a wave of E&P privatizations, despite the potential advantages of taking a company private.