Harold Hamm is an American success story. Born in 1945 in a small Oklahoma town, the youngest of 13 children of sharecroppers, he now employs about 500 people and is among the 50 wealthiest Americans, a ranking he first obtained in 2007, according to Forbes.

After graduating from Enid High School, Hamm worked for an oilfield-service contractor and Champlin Petroleum Co., before taking up payments on a used tank truck and borrowing $1,000 on a co-signed note. With that he started a one-truck oilfield-service business in Ringwood, Oklahoma.

In 1967, Hamm incorporated Shelly Dean Oil Co., named after his two oldest daughters. This became publicly held Continental Resources Inc., still based in Enid. Today he is chairman and chief executive officer, and the company operates in 20 states. Hamm is also chairman of midstream firms Hiland Holdings and Hiland Partners and on the board of Complete Production Services.

Continental's best days may be ahead, as it is 75% oil-weighted—and sitting on 2.3 billion barrels of oil equivalent of unbooked, unrisked reserve potential, maybe more, in North Dakota's Bakken play. In the Bakken, where nearly 160 rigs are working, some 22 are turning to the right for Continental.

In the 1990s he founded and chaired Save Domestic Oil Inc., which argued that OPEC producers were undercutting the oil market by flooding the U.S. with oil and flouting trade laws. More recently, he co-founded the Domestic Energy Producers Alliance, whose aim is to preserve domestic oil and gas markets. "When we see markets that are compromised, we think we can do something about it," he says.

He is past chairman of the Oklahoma Independent Petroleum Association, a co-founder of the Oklahoma Energy Resources Board, and president of the National Stripper Well Association. Because he is a leading education advocate, in 2009 the University of Oklahoma conferred its Doctor of Humane Letters on him. In 2008, Oklahoma State University benefited when Continental Resources donated $1 million to create a petroleum-engineering chair.

"If it hadn't been for education, I would never have had a chance to break away from the poverty cycle my family and I were caught in ever since the Depression," he says.

"This is a hue resource, 400 billion barrels in place, so the price may come and go, but it is going to be developed," says Harold Hamm, chief executive officer, Continental Resources Inc.

nalysts favor the company for its rapid production growth and financial performance. "We show CLR as having the best cash margins. We are projecting $50 per BOE in 2011, and that helps keep CLR as our favorite oil-weighted E&P," says Madison Williams' managing director Andrew Coleman. "Given the movement in the oil forward curve…and with management aiming to double production between 2011 and 2014 (36% CAGR for 2010-2014), we see 2011 debt-adjusted growth of 26%...Given its peer-leading cash and income margins, we continue to see potential for CLR to stay ahead of the pack."

Ernst and Young has honored Hamm with its National Entrepreneur Award in the energy, chemicals and mining category for his accomplishments in the oil industry. Oil and Gas Investor talked with him about the company's direction and why the Bakken is so important.

Investor: Why have you always been oil oriented in your strategy?

Hamm: We did that intentionally starting in 1980, because I knew too much about natural gas. Deregulation back then was going to mean all that gas coming to market all at once, so I knew prices were going to be bad for awhile.

Investor: You've said Continental is going to triple in size in five years. That sounds pretty audacious.

Hamm: It does, doesn't it? We've normally doubled every five years, so when you get to the size we are now, that's saying a lot. But we have almost 900,000 acres in the Bakken, and from our current inventory, we think we can predict almost exactly where we're going to be. At $85 oil, we see about a 50% IRR and we have oil hedges locked in to 2013 at up to a weighted average of $89.

Investor: Transportation bottlenecks won't hold you up?

Hamm: We're railing it out now, but when it snows that shuts everybody down for a while. We have seen a shortage of trucks but I think rail is keeping up, just not quickly enough. There are several (relatively small) pipelines in the mill…but somebody needs to take the initiative to build a big line right to Cushing (Oklahoma) and on into Houston. Using the rails creates $2 or $3 more per barrel of extra cost.

Investor: Would you entertain the idea of starting your own frac crews?

Hamm: No, we would not. Being up there for so long, I understand that side of the business well, so we started lining up rigs and crews early on. You gain a lot of efficiencies by working with the same crews day in and day out. Efficiency improvements are offsetting rising service costs.

Investor: Part of that is your Eco-Pads™.

Hamm: We're using four now and will have a fifth before too long. You can drill eight wells on a pad and do it without tearing up the land. It's a no-brainer. These walking rigs are phenomenal. You can move from one hole to the next in two hours and get back to drilling, so you can drill and complete four wells in 120 days and save 10% in costs.

Investor: Tell us about your recent Bakken study.

Hamm: I've been spreading the word about U.S. oil potential, especially in the Bakken. We decided nobody is better equipped than us to scope it as far as size. In the past six weeks, I've met with Lynn Helms, the head regulator in North Dakota, and we also met with the PUC, which regulates pipelines in North Dakota. I've had conversations with the new governor and the former governor who is the new senator.

Investor: Why do this "campaign" for the Bakken?

Hamm: We need this information for a couple reasons. One, for housing all the workers in the play and basic infrastructure needs in North Dakota. The rig count is around 165 and we're in the dead of winter; we've already had three blizzards. Our workers can't live in fragile campers like they do in the summer. That won't cut it.

But it goes farther than that. Before people build any crude oil pipelines, they need to know how long this play is going to last and how big it will get. These are big decisions, so I've spent the past five or six weeks talking to a lot of people. We came out with some pretty interesting numbers.

From July through September, the EIA said the amount of petroleum imports was down slightly, below 50% of U.S. consumption. That ought to make headlines. It certainly is an eye-opener. Everybody knows consumption is down due to the recession, but still, I think this is quite an accomplishment.

Part of the reason is the Bakken. We see 24 billion barrels of fully developed potential in the Bakken-Three Forks and Lower Lodgepole formations, with today's technology—and we see the technology improving a little more. And that's less than 5% recovery. The number could be better as we get down the road with secondary and tertiary recovery.

Investor: So we can be assured this is for real.

Hamm: In the early 1980s we had a boom in North Dakota based on commodity price and when the price went away, the boom went away. This is entirely different. This is a huge resource, 400 billion barrels in place, so the price may come and go, but it's going to be developed. People need to know that as we go about making the necessary infrastructure investments.

Investor: How has this impacted North Dakota?

Hamm: We've seen production triple and we expect it to triple again. North Dakota production is about 350,000 barrels a day now and it's gaining by about 5,000 barrels a month. A year ago, Helms said it would increase to 700,000 a day. IHS says up to 1 million within 10 years. But it looks to me that we're on a growth path to triple in less time. I can see this getting to 1 million barrels a day in five years. It's pretty phenomenal. The Niobrara has good potential, but it's not anything like this.

Investor: How is your 2011 plan shaping up?

Hamm: About three-fourths of our money is going to North Dakota. Total capex for 2011 is $1.36 billion; about 66% of that or $819 million is for the Bakken and Three Forks. The Montana Bakken is going to get another $75 million and our Red River units will get $58 million. So that leaves about 20% for the Anadarko and Arkoma Woodford and a few other projects, such as in Michigan.

Investor: Which are you more excited about, the Niobrara or the Cana Woodford?

Hamm: Obviously our Cana Field is very exciting because we are further along on it. Even with low gas prices the rate of return is about 38% to 40%. We'll have eight rigs in 2011, going up to 15 to hold our acreage. The Niobrara is exciting but we're going in with our eyes open. We're going to try it on a 1,280-acre (spacing) basis. According to my model, at $85 oil, we see a 35% ROR on 640s and up to 60% on a 1,280 basis. It's phenomenal.