When we last conduc­ted a formal interview with Continental Resources Inc. chairman and CEO Harold Hamm, in 2011, the Williston Basin was becoming a hotbed of drilling. Hamm was talking up the basin’s virtues to North Da­kota regulators, congressmen and anyone else who would listen, insisting that the Bak­ken and Three Forks plays were going to be much bigger than anyone thought. Production was going to triple in size, he said, and soon, more infrastructure would be urgently needed, especially pipelines to the Texas coast and man camps to house hundreds of workers.

At the same time, the Eagle Ford and Permian plays, pumped up by soaring oil prices and horizontal drilling on pads, were also set to surge. Now, the successful outcome is clear: U.S. production has nearly doubled over the past five years, and storage has filled up. Imports have decreased as a percentage of daily consumption.

This December, the government lifted a 40-year-old crude oil export ban—a goal Hamm took personally, participating in 250 one-on-one meetings in the nation’s capital alone.

The company’s 2016 budget reflects a dramatic 60% cut in spending from 2015 levels, with management saying Continental will be cash-flow neutral even at $37 oil. The company is going to use 19 operated rigs this year—only four, however, in the Williston Basin, with the rest in Oklahoma’s Scoop, Stack and Northwest Cana plays. At press time, it announced some high-flowing new wells that have extended the Stack play, proving yet again that it can find big reserves in older, heavily drilled areas.

The company will be cautious during the downturn. It expects to add about 60 DUCs during the year for a total of 195 by year-end. The aim is to prepare for higher oil prices by then and ramp up production only when the time is right, through a disciplined, measured approach with an eye on the global market. Hamm recognizes that U.S. producers have the capability to oversupply the oil market.

Hamm is a longtime advocate of the U.S. independent. In the late 1990s, he formed Save Domestic Oil. Today, he chairs the Domestic Energy Producers Alliance (DEPA), a group of trade associations that fought for the right to export oil. For his tireless work on the industry’s behalf, Hamm is Investor’s Executive of the Year.

According to Harold Hamm, Continental Resources Inc. chairman and CEO, America has quickly become the crude oil market of choice.

Investor Now that the U.S. can export crude oil everywhere, not just to Canada, what kind of market do you foresee?

Hamm The real question is: Who do you want to buy your oil from? America has become, quickly, I think, the market of choice. We have the rule of law, a good court system, the American financial system and plus, you’d be dealing with individual companies, not countries. We have the security of the resource, the size of supply—and we’re going to have a lot more of it going forward. The other advantage is the quality of the oil we have, this light oil that refineries want.

Investor You mentioned size of supply. How much can we safely export?

Hamm We do have a big supply. We about doubled it from 2008 to 2014, from 5 million barrels a day (MMbbl/d) to almost 10—and now it’s down to about 9 million. We can double it again on a barrel-per-day basis, but I think we need to temper that by saying we will ramp this up systematically.

We see it advancing in lockstep with demand in the world. Everybody’s been bit a couple of times, and we’ve got several lessons learned from oversupply. Everybody in the U.S. has identified large prospective areas and done the land work; then you’ve got to develop that and hold your leases, but most of that is done, so we can develop this thing more systematically.

Investor But with the glut in world supply now, aren’t you worried about sending U.S. oil into a weak market?

Hamm There are a couple things going on now about supply. One is what’s happening in Libya. Satellite pictures show storage tanks there burning that ISIL attacked; those tanks are half a million barrels apiece. Also, in Nigeria, where historically they had a militia lined up by the government just to protect their oil fields, it was costing them a lot of money every year, up to $500 million, according to reports I’ve read. When the government quit spending that money, those guys turned around and started blowing up pipelines. They’ve taken production from a high of 2.2 MMbbl/d down to 1.9, so that’s 300,000 a day off due to sabotage. Most recently, they blew up the loading facility owned by Shell known as Forcados—taking off another 400,000 per day for at least 120 days.

Investor How do you view the challenges of high decline rates in U.S. fields?

Hamm The EIA uses decline rates of 6.1% in conventional wells, but about 60% of our production today is from horizontal wells. DEPA says the overall U.S. decline is 16.5%, and that’s for both horizontal and vertical wells. At that rate, U.S. production declines would be nearly 1.5 MMbbl/d in 2016. Certainly, the Eagle Ford was already in decline before prices fell.

We’ve modeled decline rates, and the thing is, if you accelerate production, you accelerate declines, but it gives you a rate of return and increases your EURs. But yes, some decline rates are pretty big. The EIA expects U.S. production to go down by about 100,000 barrels per day every month this year. I’ve talked to Adam Sieminski [the EIA administrator] about this. It’s not hard to talk about decline rates if people quit putting money to work.

World production is declining pretty quickly too; in fact, when you do the numbers, you come up with declines of 6- or 7 MMbbl/d this year that we have to replace—that’s like adding Iran and Iraq.

Investor What’s your take on the timing of the recovery in oil prices and drilling activity?

Hamm Everybody’s looking for when this thing turns around, and it will adjust. I say the price gets back to $60 by year-end. Pavel Molchanov with Raymond James predicted recently the same thing. In 2010 when it turned around, it rebounded fast, by $30 or $35 a barrel. You can go back to 2001 when the World Trade Center attack happened, and demand went down due to the reverberations from that, but the same thing occurred then, a very sharp turnaround.

Investor Any rebound might get stalled by Obama’s proposal on a tax of $10.50/bbl.

Hamm It’s a nonstarter, it’s dead on arrival. It might be more impactful to talk about an oil import fee—that’s the only thing that will shake up OPEC.

Investor Is Continental playing defense right now to prepare for the upturn?

Hamm We are. Like everybody else, we’re cutting back. Our budget this year is $920 million. It’s all in how you manage it. We do need prices to come back. Unfortunately, we’re the second-most active operator in the U.S., and I almost hate to mention it. We’re running 19 rigs now: five in the Stack, five in Northwest Cana and five in the Scoop, but only four in North Dakota.

In the Stack, these are tremendous wells. Where we are it’s over-pressured, and the wells come in flowing 3,508 barrels of oil equivalent per day, and the pressure is 6,000 psi. It’s three times as good as the other normal-pressured areas in the Stack. When you look at the whole spectrum of plays in the U.S., the ones I’ve mentioned that we are in are all in the top quartile.

Investor You do plan to have some DUCs, right?

Hamm Where we are drilling, we are not completing all the wells. In North Dakota, we’re running four rigs but not completing those wells this year, not at these prices. We have one or two lease obligations we’re drilling, but that’s it. But in Oklahoma, you’ve still got superb economics, especially in the Northwest Cana area where we have a joint venture with SK E&S out of Korea.

I guess you could say we’re playing defense, but still actively seeking new opportunities, primarily in new plays. But, we’re not trying to find another gas field.

Continental’s price outlook of $60 oil by year-end is more optimistic than some other forecasts.