The oil barons of the 19th and 20th centuries are among the most recognizable names in history.
One of the more interesting rags-to-riches tales is that of an oil tycoon by the name of Haroldson Lafayette Hunt.
During his early years, Hunt held an array of less-than-attractive jobs, which at one point included driving a team of mules for a spell. He even tried his hand at semi-pro basketball.
After his cotton plantation was flooded in the early 20th century, H.L. Hunt had just $100 to his name, which soon turned into a cool $100,000 in poker game in New Orleans.
But if it was Lady Luck that turned his first profit, then it was sharp business negotiations that launched him into the history books. You see, Hunt took his gambling profits and bought oil properties in Arkansas.
It wasn’t until he got wind of an oil discovery in East Texas, however, that his real fortune began to build. Through his shrewd negotiations with Columbus Marion Joiner, who hit the East Texas gusher, Hunt soon owned one of the largest oil fields on the planet at the time.
By the mid 1950s, Hunt had built a nearly $1 billion oil fortune, worth $4.5 billion when adjusted for inflation.
Some things never change — except the numbers just keep getting bigger…
Meet the New Class of Oil Barons
Today, there’s a new class of U.S. oil barons.
Instead of betting their empires on potential dry holes dug into the Texas soil, however, these wildcatters have a little more security than their predecessors.
Thing is, we can hardly call what they do “speculation.”
Leading this class of oil barons is Harold Hamm, widely regarded as one of the pivotal players in the Bakken. In helping transform North Dakota into the oil-producing powerhouse it is today, Hamm’s fortune swelled to about $17 billion.
This new crop of oil billionaires is doing just as well, too. And like H.L. Hunt’s success, theirs isn’t by sheer luck.
It also shouldn’t come as a shock to learn that these modern-day oil barons are miles ahead of the major integrated oil companies.
Don’t Fall for the 4.5% Oil Curse
Although I admittedly revel in the misery of Big Oil, it’s difficult to imagine an oil stock today that isn’t performing well. Crude prices have been trading in triple-digit territory for nearly all of 2014, yet companies like ExxonMobil have been stagnant.
Is it really worth betting against Big Oil?
Well, here’s how it worked out for the widows and orphans tightly grasping their Exxon stock…
The reward for their loyalty to Exxon was an underwhelming 4.5% so far this year.
Don’t feel too bad for this $440 billion oil company. As we are both well aware, Big Oil is always late to the party. In Exxon’s case, it took the $41 billion purchase of XTO Energy back in 2008 for it to get in on the action.
Unlike Continental, however, Exxon took its time making progress in North Dakota. Last year, it brought 110 wells to sales, boosting production to 59,000 barrels of oil equivalent per day.
After all, there’s plenty of room for everyone in these emerging tight oil plays, right?
Sure… but you and I both know the game is quickly changing.
Cheaper, Faster, Better… Drilling
I mentioned before that today’s oil barons face different obstacles today than men like H.L. Hunt. In fact, Hunt’s first well in Arkansas, the Hunter-Pickering No. 1 well, ended up being a bust.
Hitting a dry hole today in North Dakota, however, is practically unheard of. Yet even with billions of barrels still locked in tight oil plays like the Bakken, the real game-changer is from the advancements in drilling technology.
It’s creating a new breed of oil billionaires, and Harold Hamm isn’t alone in this new class.
More importantly, they aren’t confining themselves to areas in Texas and North Dakota.
Recently, there’s another modern wildcatter making his move. Since 1994, he’s been helping shape the U.S. oil boom and is single-handedly responsible for kick-starting one of the most prolific tight oil plays in the Lower 48: the Eagle Ford Shale.
Now, he’s at the helm of another company, which is trading 21x times cheaper than Bakken giants like Continental Resources.
I’ll tell you the full details behind his latest — and most lucrative — venture on Thursday morning.
Until next time,
Keith Kohl
Check us out on YouTube!A true insider in the technology and energy markets, Keith’s research has helped everyday investors capitalize from the rapid adoption of new technology trends and energy transitions. Keith connects with hundreds of thousands of readers as the Managing Editor of Energy & Capital, as well as the investment director of Angel Publishing’s Energy Investor and Technology and Opportunity.
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