BISMARCK, N.D. — Former North Dakota Gov. Ed Schafer has joined the board of Continental Resources Inc., the state's largest oil producer, months after he led an unsuccessful public campaign to prod the Legislature into cutting oil tax rates.
Schafer, a Republican who was governor from 1992 through 2000 and served as U.S. agriculture secretary in 2008, had begun a statewide tour pushing for lower oil taxes began last January, supported by Continental and other oil companies.
As part of his director's compensation, Schafer is receiving 11,945 shares of Continental stock over four years. The shares would be worth more than $770,000 based on Monday's stock price of about $65 a share.
Schafer and Harold Hamm, the chairman and chief executive of Enid, Okla.-based Continental, said there was no relationship between Schafer's advocacy of overhauling North Dakota's oil tax structure and the decision to put him on the company's board.
Hamm said in a telephone interview that he had wanted to expand Continental's board with a North Dakota director, given the state's increasing importance to the company's business. The company plans to invest $950 million in North Dakota next year alone, out of a budget of $1.75 billion, Hamm said.
"We wanted someone who had a very strong heritage in North Dakota, that knows the state as well as he does," Hamm said. "We wanted someone of his character and conservative values ... We felt he would be a natural."
In August, the latest month for which statistics are available, western North Dakota's oil-producing region pumped an average of 445,000 barrels of oil each day, according to the state Department of Mineral Resources. Hamm said Continental now produces about 39,000 barrels of oil daily, or almost 9 percent of that total.
Hamm said he approached Schafer about joining the board in May, after the oil-tax campaign had ended and the North Dakota Legislature had finished its regular session.
Schafer had advocated simplifying North Dakota's oil tax structure — which contains an assortment of incentives and exemptions — and lowering its top tax rate. The Republican-controlled Legislature did not endorse any major oil tax overhaul, and left the state's top rate on production untouched at 11.5 percent.
The former governor also had expressed concern that state government was becoming too dependent on oil revenues, which he said were jacking up state spending dramatically. General fund spending for the North Dakota government has doubled, from $2 billion to $4 billion, since the state's 2005-07 budget period.
Schafer said he also backed oil tax reductions as governor, and as chairman of the Interstate Oil and Gas Compact Commission, which is a group of oil-producing states.
"I've been championing the energy industry in North Dakota for 20 years," Schafer said. "The tax thing wasn't anything new for me."
North Dakota state Sen. Mac Schneider, D-Grand Forks, the assistant Senate Democratic leader, said Schafer's appointment to the Continental board was "maybe a little bit more than a coincidence."
"He was the public face of their efforts to reduce oil extraction taxes in North Dakota," Schneider said. "Did that give him the inside track to be on the board? I'd guess probably so."
Schafer said he did not know the six outside members of Continental's board, which includes David Boren, the president of the University of Oklahoma and a former Oklahoma governor and U.S. senator. He has not previously been a Continental shareholder.
Schafer said he was "kind of shocked" to learn he would be given almost 12,000 shares of Continental stock over four years as part of his compensation for being a director.
"I never even asked about it," Schafer said of the stock compensation, which was disclosed in a Securities and Exchange Commission filing last week. "I was like, wow, that's generous. That's a big deal."
Schafer was a businessman before he became governor, working at the Gold Seal Co., a household products business founded by his father. He started a fish farming venture, Fish 'N Dakota, that was featured prominently in his first campaign for governor. The business ran into financial problems, and Schafer eventually sold it.